Rants

Financial Pains of Overdraft Fees

Overdraft fees

If you have ever had a bank account you probably have been hit with an overdraft fee. You know, that pesky little $35 penalty for you $2 coffee.

The concept is ridiculous. It is bad business. And yet banks are raking in billions every year because of it. It is very clever how they do it.

Automatic opt-in

The banks can no longer legally do this but for a long time you automatically opted in. They didn’t tell you about it but when you opened an account you were automatically enrolled. So when you didn’t have the funds to cover the charge, the bank would allow it to go through and hit you with that penalty. Ouch.

But they didn’t call it a penalty, did they?

They brand overdraft fees as a “service”

They offered you overdraft “protection.” They make it sound so nice, right? They would allow the charge to go through to save you from the embarrassment of having your card decline. In exchange they simply rob you out of house and home with outrageous “service” fees.

There was an alternative. Hooray!! You can link a savings account to your checking. If you overdraw your account, they will automatically transfer funds from your savings. The cost? $5-$15 per transfer. Way better than $35, right? The best part is that they won’t bother you by letting you know this happened. You can go about you day charging again and again. They will transfer money again and again. Charging you fees and depleting your savings until it’s empty. Then hit you with that $35 if you aren’t paying attention as many young people are guilty of. Myself included. Read about this poor guy’s run-in with the bank.

Relying on ignorance of overdraft fees

The depended on the fact that you didn’t know better. They didn’t want you to know that there is an alternative.

Simply opt-out of everything! Sure, you may have your card declined. It sucks, I know. But all you have to do is log in to your mobile banking app and transfer the money your damn self. Or read this article for an even simpler alternative that will rid you of overdraft fees forever!!!

Also, let me know of your shitty stories and how your bank screwed you over by leaving a comment!!


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