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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » Banks - Out to Screw You (Page 2)

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Author Topic: Banks - Out to Screw You
Farmgirl
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Guess that depends on your interpretation of "predatory behavior". I don't consider this to fall under my interpretation of that. It is not fraudulent.

I think if they are just charging standard fees (for known services, and these fees are presented to you up front in your documentation when you open an account) then you have the options of "not banking" with them, because they have already told you of their policies.

They do have to do business, and fees are part of their business and profit margin. Interest margins right now are so low that banks are only making break-even by using their fees-for-services.

I'm not saying that is right or wrong - I'm simply saying that is standard practice, it is PRINTED in your notifications when you open your accounts, so ultimately it is your choice (whether or not to bank there).

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Jhai
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I'm with Farmgirl here - I see it as akin to the massive fees you can get hit with if you aren't careful when returning a rental car. Everything is right there in the agreement you signed, and there is enough competition in the market (and other options) that it's your own fault if you get dinged. If you don't like the service offered by your particular bank, vote with your feet.

Regarding those who get overdrafts due to something outside their control - yeah, sometimes life's unfair & that sucks. Our new car was recently in the shop for three months because an idiot without insurance hit it. We had to pay the premium that goes along with our insurance policy. Should I be angry at Geico for not waiving their standard fee (which we agreed to) just because it wasn't our fault that our car was hit?

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katharina
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I don't think it is a coincidence that both of you either work for a bank or has a spouse that works for a bank.
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scholarette
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Where in the printed notices does it say that they will rearrange my purchases in order to maximize the fees? If it was just the one overdraft fee, I would agree. That is something that you are aware of upfront and does not come as a surprise. But the fact that they process my purchases in order from largest to smallest is not something I was ever made aware of.
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Jhai
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*shrug* He's been working at a eTrade for less than a year (and banking isn't their main business anyways). Before that it was online advertising. Before that online backup. Before that the airline industry. Next up will probably be some sort of social networking. The work is the same throughout - just the specifics of what type of products he's managing changes through job hops.

My belief that you should take personal responsibility for your financial decision predates meeting Abhi, nevermind predating his job at eTrade.

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katharina
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If you think people are complaining about personal responsibility, you haven't read the thread. Try reading it again.
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The Rabbit
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quote:
Where in the printed notices does it say that they will rearrange my purchases in order to maximize the fees? If it was just the one overdraft fee, I would agree. That is something that you are aware of upfront and does not come as a surprise. But the fact that they process my purchases in order from largest to smallest is not something I was ever made aware of.
This is certainly something customers should be told. I should however note that several reasons have been given here for why banks do it that way which have nothing to do with maximizing overdraft charges. Given that there are other valid reasons for doing this, it is no fair to presume banks do it solely or even primarily to maximize overdraft charges. It is extremely likely that this is an artifact of an automated process that was implemented for other valid reasons.
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Farmgirl
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quote:
Originally posted by katharina:
I don't think it is a coincidence that both of you either work for a bank or has a spouse that works for a bank.

While the fact that I work for a bank truly does help form my opinion (I'm not going to deny that), since I don't work with the "money end" of the bank (but in tech support) really the only part of this conversation affected by my employment is that it has helped to educate me in what all goes on inside a bank, and what those fees are used for. In other words, I can truly see if from both sides now. Sure, you can accuse me of being biased because those fees help pay my wages. Fine, accuse away. But really working inside a bank has helped me to understand how the whole system works, and it is complex and extremely heavily regulated. So I don't like blanket accusations against banks when a lot of it is very honest people trying to do their best to help customers, but are not getting any credit for that.

As I said before, I used to have chronic problems with fees and overdrafts, etc. In my current position, I could actually lose my job for these types of things. But now that I have a better understanding of the system, and work within the parameters outlined, I rarely have any issues with it.

(I should also say that is probably true of each and every one of us on this forum -- we have a better understanding of our particular industry we work in, whether it be teaching, or tech, or restaurants, etc. than those who do not work in that environment, so as such, we would get upset by blanket statements that slam the entire industry.) (Not that I've ever had a reason to slam libraries, Kat) [Smile]

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Jhai
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quote:
Originally posted by katharina:
If you think people are complaining about personal responsibility, you haven't read the thread. Try reading it again.

[Smile] I don't think people are complaining about personal responsibility, I think they're shirking it. If you don't like the overdraft protection your bank provides, then either take steps to never use that service or find a bank that allows you to opt out. Simple as that.
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MrSquicky
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While I agree with that, it doesn't really change the fact that banks are being pretty slimy when intentionally arranging charges against an account to maximize the number of overdrafts against it so they get more fees.

---

It's easier for me, because I've got sufficient funds, but whenever I deal with banks, I assume that they are out to screw me. I think it is important for people to realize that, by and large, banks are not on your side. They are on their own side and while that often coincides with your side or at least appearing to be on your side, they shouldn't be treated as entities to trust.

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BlackBlade
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quote:
Originally posted by Alcon:
You know how when you over draft on a debit card the bank slaps a bunch of fees on you? I'm sure we've all been through it where we are running close to the line and accidentally make one purchase that puts us over and suddenly we owe the bank $200. Some $30 for every little bit we go over. What I never noticed, but learned from this New York Times article is that the banks intentionally run your purchases each day in order of size, with the intention of maximizing the fees from any overdrafts. I'd noticed that my purchases seemed to show up out of order on my account, but I'd never noticed that they were ordered perfect by size and day, biggest to smallest. I'd always figured it was just a matter of different systems with different speeds. No, it's the banks trying to make you over draft so they can hit you with the maximum fee possible. they figure if they run the biggest stuff first you'll go over earlier and then all the little stuff each gets a fee. So rather than running all the stuff in order, and then having that big thing put you over and paying one fee, you end up $200 in debt to the bank when you really only went $2 over on one purchase.

I'm glad people are talking about making this illegal, because that's just down right slimy. Can we just do away with the whole banking industry? And apparently credit unions are just as guilty of this! [Wall Bash]

I'm committing the sin of having skimmed through the thread before posting. At my bank I got bitten with overdraft fees, so I went into the bank, sat down with a customer rep, told them I want my debit card to be denied rather than accepted if I ever overdraft, and now I never pay those infernal fees.

I was under the impression that the bank simply charges a fee per transaction rather than by the dollar amount.

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Darth_Mauve
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On the radio today they were talking about the growth of Pay Day Loan stores.

It seems that the state of Missouri has legally limited the APR of Pay Day Loan companies to 1047% (That is one thousand forty seven percent)

Between all the calls that were being taken about this organized thievery, many callers called in and said, "Yes, its expensive, but its cheaper than the fees you get at a bank if you go $1 over your limit."

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katharina
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Like I said, Jhai, if you think that, it means you haven't actually read the thread. Try again.
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Jhai
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quote:
Originally posted by MrSquicky:
It's easier for me, because I've got sufficient funds, but whenever I deal with banks, I assume that they are out to screw me. I think it is important for people to realize that, by and large, banks are not on your side. They are on their own side and while that often coincides with your side or at least appearing to be on your side, they shouldn't be treated as entities to trust.

This is pretty much what I think anyone's default position should be when dealing with a for-profit company (and most non-profits), especially larger ones. The companies are there to make money, and in order to do so, they offer services or goods to you. Yes, they want to keep you as a customer, and they have certain legal requirements, but both of those constraints will only help you so much. Be proactive on your own behalf, and be aware of what you're agreeing to when contracting a service or purchasing a good.
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Raymond Arnold
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quote:
I'm committing the sin of having skimmed through the thread before posting. At my bank I got bitten with overdraft fees, so I went into the bank, sat down with a customer rep, told them I want my debit card to be denied rather than accepted if I ever overdraft, and now I never pay those infernal fees.
I did the same thing, and they told me no. Various reasons why this is a necessary part of automation rather than deliberate sliminess have been discussed here, and for the most part I believe them although I'm sure that banks are at least aware of how it benefits them, and that probably gives them little incentive to improve their system.

As for finding new banks, well yeah there's probably all kinds of options out there for people with the time to research them. For the past two years I was at an intensive school, with only a bike for transport. There were only a few banks within biking distance. The one I picked didn't mention anything about the overdraft fees. It probably was mentioned among the fine print, and sure I could have read the fine print in detail and committed it all to memory but if I did that for everything I bought I'd barely have time to get anything else done. I knew credit cards could be declined, I assumed debit cards worked that way too and saw no reason to think otherwise until after the fact.

After my first overdraft I complained to the bank, they said "deal with it." I looked at another bank or two, they both had the same policies, I didn't know about online banking, so I gave up.

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andi330
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My understanding of why the order is rearranged to have larger charges processed first (other than maximizing overdraft fees) is that years ago banks gave surveys and respondents said this is what they preferred, so that if they bounced a check, the more important (and presumably larger) charges would not bounce, only more insignificant charges. The article doesn't say when this survey was given. I am going to assume that it was given to customers at a time when overdraft protection was either non-existent or much less prevalent. When overdraft protection was not available or less available, this would make sense. However, I suspect that if the survey question was given again today, in banking system where overdraft protection is the norm, and where reordering purchases actually increases overdraft fees I suspect banks would get a much different answer.

Also, having recently learned a lot about statistics and surveys, I know that banks and other organizations can ask questions in such a way that they get the answer they want. If the survey was given recently you could still get people to answer that they want their transactions re-ordered by wording the question in such a way that it skews the answer.

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Tatiana
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I remember how shocked I was when I went off to college and first started dealing on my own with banks, landlords, a university, utility companies, roommates who owed money for phone charges, auto mechanics, grocery stores, etc. It's like there is hardly anyone who isn't out to maximize their profits at your expense, regardless of what's fair or right. Those who seem more vulnerable, the young, the ignorant, the very old, those who are sick, those who are impoverished, they are the very ones whom merchants and dealers will skin for extra dollars whenever they get a chance. It upset me a lot. I thought the world was a better place than that, that people were better than that.

But alas, they aren't. That's why one should be diligent in looking out for one's own interest in commercial transactions. Read Consumer Report. Ask around about businesses. Get references. Read policies and contracts. Understand what you're agreeing to, and insist that you get what you're entitled to. Those who don't, unfortunately, get taken advantage of. I'm sorry to have to say that, but it's almost universally true.

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katharina
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Amazing how that sponsored questionaire got them the exact answer that would enable them to slap as many enormous fees on people as possible.

It's also incredible how the software has been designed to make the financial penalties as horrible as possible for the customer and as beneficial as possible for the bank.

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King of Men
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It's worth noting that if banks didn't get money from this sort of thing, they'd have two options: Either dispense with checking accounts altogether, or else charge a yearly flat fee for having an ATM card. (As a side note, the second option is common in Norway.) It's not as though they provide checking accounts from the plain goodness of their hearts, after all. In the current system they make their money from the careless and those who run their accounts close to the limit. In a different system they would make a smaller profit from everyone. Take your choice.
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rivka
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Door #2. [Razz]
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katharina
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Definitely door #2. An honest flat rate instead of this back door extortion of those who can least afford it would definitely be preferable. And easier to shop around to get the best deal, so the most competitive.

This is total crap. This is like an airline advertising the lowest airfare and then piling on hundreds of dollars in fees they don't tell you about up front.

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Farmgirl
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Someone's been reading Hatrack and listening to your complaints! [Wink]

Two Banks to Lessen Overdraft Penalties

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katharina
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Good article.

But this made me laugh:
quote:
"We are doing this because we have customers under stress, and we can help a lot of them right now," said Brian Moynihan, president of consumer and small-business banking at BofA, which is based in Charlotte, N.C.
Ha! I'm positive that the legislation before Congress right now that will limit their ability to charge those outrageous fees had NOTHING to do with it, and if the major banks recieving government aid continue to bleed their customers, they will lose the ability to set their own policy and by softening the policy now (by less, though, than what is proposed in Congress), they might head off the legislation. No, this timing is merely coincidental. [Razz]
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AvidReader
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Is there a bill? I figured after the Credit Card Act, they were trying to head any off.

I loved it. I got my new bill from BoA with a nice note about how in an effort to help me, they'd extended my due date. Somehow, I suspect they just didn't want to change the date they print the statements. [Smile]

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