Banks made more than $30 billion off people who had no money
In a revelation that will shock nobody, the banks keep finding ways to fleece consumers.
But even the most cynical of us could be suprised to find out that the overdraft industry now makes banks $33 billion per year.
Who says you can’t make money from nothing?
It’s gotten so bad that Pew Charitable Trusts calls the overdraft protection fees, a “frequent and harmful” practice.
Here’s what Nick Bourke from Pew said to NBC about overdraft fees:
“Too many banks, both large and small, charge high and multiple fees and engage in practices that are unfair. Our research shows that 40 million people throughout the country paid an overdraft or NSF [nonsufficient funds] fee last year and that’s not good for anyone — and most of the people (68 percent) would rather have their transaction declined than pay that steep overdraft fee.”
So what should be done?
Pew outlined 3 solutions:
- Make overdraft penalty fees “reasonable and proportional” to either the financial institution’s costs in providing the overdraft loan or to the overdraft amount.
- Limit financial institutions to six overdraft charges in a 12-month period and limit fees to one per negative balance incident.
- Prohibit financial institutions from reordering transactions to maximize overdraft fees. Pew wants transactions to be processed either chronologically or from low to high dollar amount.
Those changes would be a small step towards stopping the banks from continuing to fleece consumers. But there’s a long way to go.
Photo – Twitter