I'm still kind of mesmerized on this one, it felt like regulatory action almost happened, the most lucrative of the overdraft practices got limited circa 2009/2010, and then banks voluntarily toned it down and the regulators mostly looked the other way on things like reordering?
I moved to One Financial, but I've kept a local credit union account as well. This probably makes no sense, but then again it's ok to feel conservative about banking.
It's worked out for me so far. The local credit union is one block away. I have not used it but there are no fees to just park money in a checking account.
I still don't know what happpens to such retail banking as interest rates go negative.
Who on their right mind would rather me charged $30-40 instead of having your card be declined?
Not me, so I try to turn off any such things when I create a bank account
All of this insane behavior is a big reason why the CFPB was created, and legislation was passed to limit “overdraft protection” auto-opt-in.
https://www.consumerfinance.gov/rules-policy/regulations/100...
1. have $10 in your checking
2. pay $9 for steak
3. fill account with $500
4. buy sausage for $2
bank reorders it as
1. have $10 in your checking
2. pay $9 for steak
3. buy sausage for $2
4. charge overdraft
5. count $500 deposit
Is that what banks would do? I faintly remember that really old accounts I had in Germany had overdraft capability, but for all newer(last decade or so) accounts, I had to explicitly request overdraft. I guess it was inherently more user hostile in the US. Although in German its not because of good service, but rather because banks don't trust the consumer.
Given a balance of $100 and 4 transactions of $20, $20, $20, $90 you can either be charged one, or three overdraft fees depending on the order in which your bank deducts those from your account. Basically, ordering from largest to smallest will cause the most number of overdraft fees.
The benefit of US banking despite lax regulation was that there's a ton of different banks and credit unions to choose from. Some are great and some are shit. Literally hundreds to pick from. Canada there was like 5 big banks, a large credit union, and then depending on your area there was maybe perhaps a small community credit union.
Basically every bank has some kind of "premium customer" program that you qualify for by having enough investments or loans from that bank and magically all your banking fees go away (obviously they just make their money from the services they provide for your investments/loans)
The only fees I pay are a small percentage for management of mutual funds.
Yet we have quite a lot of banks to pick from - around 60 if you include building societies (more if you include private, niche and specialist banks). We also have a fair few new and digital challenger banks like Monzo, Starling, Atom, Revolut and arguably Metro Bank. If anything our banking system seems far more innovative than the US system.
I don't know about Canada, but clearly regulations don't mean that you can't have competition and innovation.
See also regulation about what the incumbent last-mile network provider (Openreach) can charge ISP's to provide services on their lines which has led to a larger number of ISP's available in any one place (unless you're in Hull, because of historical reasons).
as for ISPs, it's hard to do worse than comcast, but at least they don't block a wide range of content by default.
https://en.wikipedia.org/wiki/Web_blocking_in_the_United_Kin...
And the piracy site blocks are due to high court orders - not a lot an ISP can do in those cases.
There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization.
I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.
Water bill, electric bill, mortgage, and property taxes are all ACH for me. Many people pay rent that way. I don’t think it’s commonly used for day to day interactions but a lot of payments are still ACH
It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.
The way it works in NL is you pay a (high like a creditcard) interest rate for every day the account is below zero. The transaction order doesn't matter it looks at the balance at the end of the day and charges you 1/365th of 13% interest.
The only way banks fuck you over in this system is with the dates. Using a card means a transaction date of "today", getting paid almost always has transaction date tomorrow. So you end up paying 1 day of interest. Much less than a $ 40 overdraft fee and regardless of the number of transactions.
1. have $10 in your checking
2. pay $9 for steak
3. buy sausage for $5
4. charge overdraft
5. buy milk for $3
6. charge another overdraft
7. pay $2 for parking
8. charge another overdraft
9. buy a pack of gum for $1
10. charge another overdraft
11. count $500 deposit
It was truly despicable behavior that benefited nobody but the banks.
-$5: $490 left
-$5: $485 left
-$5: $480 left
-$500: -$20 left, overdraft fee of $40, $-60 left.
They will reorder it as:
-$500: -$5 left, overdraft fee of $40, $-45 left.
-$5: -$50 left, overdraft fee of $40, $-90 left.
-$5: -$95 left, overdraft fee of $40, $-135 left.
-$5: -$140 left, overdraft fee of $40, $-180 left.
Yeah, the bank employees involved in this should go straight to jail.
1. have $100 in your checking 2. pay $10 for steak 3. buy sausage for $5 4. Buy a ticket for $99
You think you get one over draft fee
bank reorders it as
1. have $100 in your checking
2. Buy ticket for $99
3. buy sausage for $5
4. Pay 10 for steak
Get 2 over draft fees. Add more transactions in between the ticket purchase to increase the fees.
I have transactions that show up out of order to the event time. Thou I wouldn’t put it past some smaller banks in low regulation geographies
You cannot have law as a list of specific cases: it must be based on patterns - "All arbitrary appropriation is forbidden and sanctioned", then further made into distinct categories to substantiate and differentiate the amount of gravity. All theft is illegitimate.
Regardless, the bank's mission is to make money, and they can make a lot more of it by adversely reordering transactions in their favor, it is not at all a reach to assume that they do so, and in fact have done so and may well continue to.
https://www.postbank.de/dam/postbank/pdf/privatkunden/Postba... https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/... https://www.commerzbank.de/portal/media/efw-dokumente/preisa... https://www.hypovereinsbank.de/content/dam/hypovereinsbank/s... https://www.ing.de/girokonto/konditionen/ https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaush... (Volksbank) https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/d... (LBBW)
In this sample, if overdraft is enabled, you pay up to 15% p.a., if disabled the cancellation fee is up to 2€ for the postal notice, but mostly just porto (0,80€).
Also note that for ATMs (including deposits) and within-bank transfers, we had no more than a couple seconds latency since €, which got expanded for all willing banks to cross-bank push transactions specifically requested to be "SEPA instant push".
The "SEPA instant push" transactions have some issues with reversing in case of accidentally fat-fingering IBAN (target account; like a crypto wallet address but no crypto) or amount. Once the money is in the target account, you basically have to go to court if it wasn't outright fraud. And being instant removes the window you had to call your bank and cancel the transfer. IIRC there are some further liability shifts.
And yes, this transparent interest-based handling is why we get by perfectly fine without credit cards.
Highway robbery.
Every time I tell this story it makes my blood boil.
It wasn't 500% of 900, it was the sum of the overdrafts on all the previous transactions.
In a way though I feel like the American system is set up to traumatize you for being poor so much that you develop the thirst to become a millionaire one day when these things don’t affect you.
Well it doesn’t matter what I assumed, the law said the check was no longer valid. When Wells Fargo honored it and overdrafted me they disregarded the law and said I was committing check fraud if I didn’t pay up. That’s how I ended up at US Bank, because fuck if I’m going to pay you for illegally processing my check.
Edit: and yeah I had “check fraud” on my record for years after because Wells Fargo said they didn’t care about the law and just lectured me about being responsible for checks I wrote.
A contract has a time limit, one part arbitrarily extends it and claims rights: this is completely absurd.
The lawyers I could hire are advertised on billboards and park benches on spin off TV shows.
The next morning I went in to sort it out and was told I needed to travel an hour away to the branch I had originally set up my account at. Upon arriving at my "home" branch I was told the manager was on vacation and no one else could help, but she would call me as soon as she got back. Two weeks later, having received no call, I went back in and saw the manager sitting at her desk. I closed all my accounts on the spot and never looked back.
Anyway, in my case the bank did ultimately return my $300 as they desperately tried to retain my business. Pretty sure this is another way they get away with stuff like this, just refund the squeaky wheels. "Oh, sorry for the mistake."