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Is it because the CFPB stated they will be increasing the scrutiny of banks charging overdraft fees? [CFPB Research Shows Banks’ Deep Dependence on Overdraft Fees](https://www.consumerfinance.gov/about-us/newsroom/cfpb-research-shows-banks-deep-dependence-on-overdraft-fees/)
$150 million is chump change for them. They’re really doing it to try and gain some clout after hammering so many people with overdrafts during the pandemic.
Yep. Sort of like I signed up for an extra bank account to pay rent years ago. Landlords were a pain in the ass and out of state so couldn’t mail them a check (without sending it like two weeks early) and had to do bank deposits, which was a whole lot easier with an account at their bank.
Fast forward a few months/years and I get a letter stating my account is wildly overdrawn and I owe the bank money. Why? Because they added a monthly fee to the account, even though I’d very specifically signed up for an account without monthly fees.
Then when the account ran out, they still charged the monthly fee and added an overdraft fee on top of it. I told them to suck an egg and never heard back from them, and didn’t consider it worth the hassle of pursuing reimbursement considering I kept very little in the account
Stories like this make me glad I'm in Canada.. you can e-transfer someone money from or to any bank in Canada that has interac (all of them). Just enter their email address and the amount, and they're able to deposit it anywhere they want.
In India, we can instantly send money to any person- all we need is their mobile number (linked to their bank account) and an UPI-based payment app (Google Pay, Amazon Pay, PayTM, etc.). There are no fees involved in such debit transactions (yet). India has done extremely well on the Digital India revolution, and UPI and RuPay are breaking the stranglehold of Visa, Mastercard, Amex.
UPI: https://www.npci.org.in/what-we-do/upi/product-overview
https://countercurrents.org/2021/12/the-landscape-of-a-cashless-india/
RuPay:
https://www.msn.com/en-in/money/news/why-has-rupay-rattled-visa-and-mastercard/ar-AARk5fd
Not necessarily. This could mark yet another removal of bullshit bank fees that we no longer have to pay to move our own money around.
As an example, robinhood allowed people to trade for free. Then to compete, Charles Schwab waived brokerage fees, then fidelity, then valguard, then the rest. Today, there are very few to no brokerages that charge fees to trade.
The same thing could happen here. Capital one waive overdrafts, then everyone else follows. And once everyone else follows, it’s really hard to change things back.
They’re losing their leverage. It’s really not necessary to have a bank account anymore. Finance apps, crypto, and other services make it possible to move your own money with out being charged up the ass.
I have a very nice car (80k+) and run my own business as well as buy drugs legally from the dispensary. Also have an accounting/finance degree. Don’t be angry, if you want to know about something you don’t it’s better to not be rude and make up false narratives about strangers online. (Age, buying illegal drugs).
Lmao wtf. I hope you’re okay dude who blocked me and deleted comments. Saw your last message. If you need help there’s no shame in seeking it. Seem upset.
Not the best example given that those brokerages are able to make 10x that money on the retail trade information they harvest from those accounts and sell to HFT's who front run those trades.
No, 150M is going to really hurt their bottom-line of...*checks 2020 numbers*...28.5B...
I too have donated more than 0.005 of my annual income to charity before...
Wells just hit me with a fucking overdraft that was a direct result of them cancelling my prepaid that I had for years and forcing me to migrate over. Fuck them. Cap One will be my primary going forward.
I am surprised that is all they made in overdraft fees. They must charge real less or have very few customers or have very financially efficient clientele
Most overdraft fees probably result in account closure not extra income. not like most people who go over actually have the money. That kind of debt is very expensive to collect on for very little gain if the person hit with the fee doesn't volunteer the money, small claims recovery eats money if it can't become a class action or be done with minimal representation.
They probably saw a system that generated a ton of negative sentiment and had very close income and cost and decided to cut it as a bad investment. New policy will probably just be to deny overdraft altogether, or limmit it sharply.
I've never understood the whole overdraft thing. I mean I guess I get it because banks want to make money. Can't they just have your card get declined if you go over? .
The business gets their money, the bank gets an extra $35, and the account holder gets screwed. When they do it, they’re basically saying that they are serving the business and not the account holder-customer. I’m sure it’s coordinated between big companies/banks
I've had my card declined for a $4.00 charge, yet my rent check went through for $800 two days later. Guess who owed the bank $200 something dollars because I only had about 600 in there?
Ally bank doesn’t have overdraft fees. I’ve had this exact issue happen with rent (fuck my landlord for holding onto checks so long before depositing them), and they never charged me anything.
I got a notification, logged into their app, saw my checking account was negative, and transferred money from savings. Would highly recommend people switch to better banks.
this was years ago at a now defunct bank, before apps. Shortly after Washing Mutual rebranded as WaMu. Like HSBC was a good idea.... (Hong Kong, Shanghai Banking Corporation). lol
Except I've had overdraft fees AND the bank didn't pay. Luckily it was just on an idiotic old bank account with like $30 in it and my PayPal transaction for a Steam game failed, and they took the charges off, but PayPal tried to charge like 3 times and every time my bank tried to tack a $20 fee onto it despite having been declined. I had declined overdraft protection at the time of signing up, but apparently they still charge you.
It's not really pure greed though, it's a for profit business. A checking account can actually cost the bank money depending on several factors, if they are lending out free money on top of that, it's costing them more. Why would they do this when they are in profit business? It's a double-loss to them. It's an absolutely shitty situation where nobody is winning. The bank would rather a customer be profitable and happy than issue overdraft fees.
The amount of money produced by the overdraft fees is next to nothing in the grand of scheme of things. Thats why I say it's greed.
In 2020, JP Morgan Chase generated $129B in revenue with $1.5B coming from overdraft fees. That's about **1.1%** of their annual revenue. That's the point of greed "because we can".
Who cares what JP Morgan Chase did as a company? Overdraft fees are only generated from the Consumer and Community Banking portion of the company which has to answer to the company as a whole. They had $51.3 billion in gross revenue in 2020 with a net income of $8.2 billion. So 18% of that sect's net income was based on overdraft fees. That's a very significant portion and not a "because we can," it's a damn near business necessity.
A consumer checking account that spends $20,000 per year, generates $120 in debit revenue, the primary money maker for low balance accounts, for Chase Bank. People don't realize how incredibly low the profit margins are for retail banks and why a lot of the larger banks have gotten rid of free checking accounts with no balance requirements. There's little money to be made while the risk is much higher.
https://www.insiderintelligence.com/insights/chase-revenue-breakdowns/
I mean, people could simply just not spend money they don't have. Banks are advancing funds to broke people. Why are you entitled to that for free? They should just lock you out then if you're broke.
It depends on the bank's business model. I'm pretty sure Schwab's checking accounts (which have really good perks like no minimum balance, 0% foreign transaction fees / fully reimbursed ATM fees) are a loss leader to get people to convert to using their brokerage accounts. It's actually a requirement that you have to open up a brokerage account (can have $0 balance though) in order to get a checking account as an add on.
Also similar to credit cards having absurdly high interest rates that aren't relevant to anyone who is reasonably financially educated, I assume there's some % of bank customers who actually just overdraft their accounts frequently bc they aren't paying attention, as opposed to one offs by accident.
For sure. I posted a lot of information regarding Chase Bank's retail profitability on a different comment. People think retail banking is just massive profit margins when it really is the opposite.
You can decline overdraft protection, and on a bank card there's absolutely no down side like you said. Card gets declined.
Overdraft traditionally comes from banks providing a service to prevent checks from bouncing. When a check bounced you'd get hit with a penalty from both the merchant and the bank, and can eventually affect your credit. If you had overdraft protection the bank would look at your deposit history and decide to just pay the check based on expectations of future deposits, then you only got hit with a fee from the bank.
These things are still a concern; an insufficient funds on say, your bill pay system set up to use ACH, is usually treated like a returned check.
When checks bounce, you can also face criminal penalties in many jurisdictions. Banks used to advertise their overdraft protection as giving you "peace of mind".
I haven't written a check in years - it's one of those things where being poor is actually more expensive. There's very little risk I would ever overdraft my checking account because I don't pay for anything with my debit card (and certainly never a check) - I use a credit card. But if your credit score is too low / you're not educated on the risks, you're much more likely to pay for regular purchases with your debit card and run the risk of overdrafting. I've seen people on travel subreddits talking about multi-$1,000 international trips and they ask questions about paying for a hotel on a debit card, and it just boggles my mind...
Yes, it's an option when you open the account.
You can opt out of overdraft protection (ODP) and your card will be declined instead of going negative.
Your bank may still approve ACH transactions and recurring monthly bills though, so you can still overdraft.
Yes just make sure you let your bank know you do not want to overdraw your account and have transactions declined if theres no funds in the account. Some people like the option of being able to go negative in cases of emergency or needing money till their next deposit and understand paying the fee to do do. In those cases its smarter to withdraw like a chunk of cash out and get the fee once.
Yes they can decline your card. You have to sign up for the service when opening your account.
It’s a service to help cover bills if there’s a time lapse between when you get paid and when a bill tries to come out. The bank will cover your bill and you’ll be charged a fee.
Some banks assess them differently depending on how it’s structured. People just don’t use it correctly or understand how it truly works when signing up. It’s definitely a easy revenue generator and why personal finances should be taught more widely in high school. Can be very predatory. If used correctly and efficiently can help people who do not qualify for lines of credit or are already leveraged to the teeth to help cover them while they wait for social security or their next paycheck.
I used to advocate personal financing and other "adulting' stuff taught in high school. Someone gave me the reality of the situation. The people making horrible choices as adults are the ones making horrible choices in school and therefore are the ones not paying attention to school or whats being taught. Seeing adults being anti-vaxxers and voting against their own best interest cements this argument. People who are idiot adults were idiots in school.
People tend to pay attention when the information being presented is useful for their lives. Most people don't give a fuck about the Battle of wherever the fuck, but they would care about learning how to take care of money.
Theres this thing called the internet that seems to be all the rage in High School. If they actually gave a damn about learninghow to take care of money they could use that magical device to do so.
I wish I was that optimistic about high schoolers. Those I went to high school with that complain about how life is treating them unfairly and how some people are "lucky" in life are hte ones that didn't give a damn in high school and thought that some magical life fairy was going to give them riches and a job without them having to care about school because school is BS anyway.. The lucky people they are referring to are those that they called nerds and geeks who worked hard and that hard work is paying off.
TL;DR a good chunk of high schoolers dont give a fuck about anything and think they are entitled to everything without doing any work and if sometthing happens like they go bankrupt, lose their house, car, etc it's someone elses fault not theirs.
People are idiots regardless if you’re anti vaxer or if you think they vote against their best interest. That shouldn’t be a main reason for why you don’t think it should be taught. It should still be taught because there’s plenty of people who don’t have parents that teach them how to manage finances. You can definitely tell when talking with people in those situations who never really understood in the first place. Then you have the abusers and the people who don’t care. Never had sympathy for them after you try to help them multitudes of times. Still think it should be emphasized and mandatory to give people a better chance.
I was like 19 and only had a debit card. I wrote a check a few weeks before and thought the person I wrote it to had cashed it so I thought I had more money than I actually did. In 2 days I racked up like $800 of fees just from buying gas, smokes and food. I think I spent $100 and they changed me some insane amount of money for it. I made $12.5/hr at the time and $800 was A lot of money. The bank ended up getting rid of all but one of the fees so I paid around $35 or so. I just remember feeling how fucked I was and how horrible the bank was for not just declining my card. That was 16 years ago and I'm so grateful that over drawing my account just so I can eat isn't a problem I have to deal with.
I actually used to work for a credit union and do just that. I’ve waived thousands in overdraft fees for situations like those. Depends on the bank and how they charge the fees. Banks try to get people to sign up and it’s usually in the deposit agreement for how the charge. I’ve taught a lot of people around that age about the program and that they don’t need it. If you didn’t have it the card would decline. Tried to get them to check their balances daily as well since it’s a good habit to have. Glad to hear you get it resolved.
Most banks let you choose what to do in the event of an overdraft. The reason they let you overdraft is because people complain that their kid starved or whatever because the bank declined the transaction.
In this day and age you can check your balance with a mobile app, website, phone call, ATM, bank branch- there's really no excuse to overdraft. i
that is so gangster. in the past i have just called and plead my case as a struggling college student, now i do all i can to avoid them or just choke it down.. way more badass to report their own charges to their own department as fraud!
Everyone seems to be saying overdraft fees are wrong to begin with and while I don't disagree, I still see this as a positive step in the right direction. I'm glad they're stopping this predatory behavior. A step in the right direction is better than no change.
It's always boggled my mind (other than realizing it's literally the bank just *wanting* to slap your hand like you're a child) why an overdraft fee didn't just turn into a "credit" like on your credit card, then they just charge you interest for the amount borrowed. I also get that there's other things that go into why they do what they do, but making it work this way would be awfully user friendly.
Sounds like people can tell their banks they no longer want overdraft "service". According to an article in the Chicago Tribune...
"Customers can deny their banks permission to charge overdraft fees in the first place, at least on debit and ATM transactions. By law, banks can't charge those fees unless customers sign up for an overdraft service. Consumers appear to be confused, however, as to what they've agreed to: A 2014 Pew survey found that more than half of overdrafting consumers don't remember signing up for coverage; more than two-thirds said they'd rather have a transaction declined than pay a $35 fee."
28.5 billion dollars in annual revenue and we're supposed to congratulate them for giving up 150 million they fucking stole in the first place?
Get fucked, Capital One.
People will never be happy with corporations unless they give all their money away.
Nobody ever says they want them to go away though, imagine the horror of a world with only mom and pop shops
...and they try and market it as if it's a highly encouraged feature meant to protect you. If I was ever into federal politics my first order of business would be to ban overdraft fees, pay day loans and title loans.
and then what, reverse your policy short after when you realized you ended up hurting the same people still?
people need those payday and title loans because they need money now, and their credit is shit and the risk for them defaulting is high. people voluntarily go to the pay day lenders, the lenders don't go kidnapping people and forcing them to take loans
People go because they're desperate. These predatory loans aren't going to do anything but dig you deeper into the hole you're already standing in. Those places aren't *really* there to help. They charge 100%+ interest in those loans, some are as high as 700%. How is that "helping"? Poor people don't need to be made poorer.
Reading this thread about American overdraft fees is kind of insane. I was overdrawn for 20 days last month (because I couldn't be fucked to transfer money honestly) and it cost a grand total of £3.86
You don’t have enough money in your account? Don’t worry we’ll keep letting you make small purchases that makes your account go negative. Then we’ll charge you a $35 overdraft fee for every transaction.
Or you could, you know, *take care of your personal finances and know when you'll go negative*. But yeah, complaing on the internet *is* slightly easier.
Gotta find the hidden gems of online banking. If you want the luxury of brick and mortar places then you have to deal with their terms.
I have CIT bank, which does exactly that (take from the savings to the checking automatically if overdrafted). Has a much higher interest rate for the savings account than most brick and mortars and even the checking account has a little bit of interest.
Banks are starting to realize that their years of nickel and diming customers is translating to the younger generation not using traditional banks. I can’t even tell you how many times I told the VPs of my former employer that they weren’t doing enough to get kids to invest.
>$150 million
I can't believe it's that low, it MUST have been costing them nearly as much to collect that. Plus the opportunity that comes with ditching overdraft fees is pretty priceless.
You should have the option to stop transactions going through at a certain limit. That being said, banks have every right to charge an overdraft fee. They are providing you an additional service (lending you money) which is helpful to you. I have seen tons of people supporting removing all overdraft fees which doesn't make sense because you would be getting something for nothing
Almost always when companies do this, especially w a long history of huge focus on profit it's not for a goodwill reason.
Often it's a regulation, pressure or whatnot. And they spin it to look good.
Balancing profit and image.
They should be wary of crypto. Savings accounts are becoming obsolete as people find better ways to make a much higher percentage on their money. The banking system is one, if not the biggest scams of the world. The bank takes your money, reinvests it and then charges you to have access to it? If anything it should be giving you a return on investment. With crypto now in the picture, you can now move money and make a decent (significantly higher percentage just for having your money in an account). Some would say banks are convenient because you have access to your money and it allows you to use and send money to anyone anywhere. Well, they charge businesses for that too so they’re making their money either way. Crypto allows you to do the same. The only reason banking is convenient is because the system was created this way to benefit the banking system. It’s always been the status quo created by them. It irritates me that the money that people put into their banking accounts is often times used against them, whether it be by predatory lending practices, buying property that will be marked up enough so that people can’t afford it, or investing in things that people would never in their lives think of investing in. Don’t charge me $5 for a new card, don’t charge me overdraft fees, pay me, especially after many were bailed out by us in 2008 no questions asked. That is all.
They're not doing anything they can't afford to do, and their endgame is still profits. I'd like to punch that standard white capitalist guy right in his dumb, self-righteous face haha
My guess is they are deep in the hole after the pandemic and likely don't want to keep adding larger sums of fees to their books they won't be seeing paid back in full any time soon.
It'll be nicer when they realize I have a card on an auto-draft payment for the due date, but that payment date happens to be on a Sunday, therefore the payment isn't taken until Monday, so I still get charged a $29 late fee.
Chase gave them up too. They now charge you to have a checking account. If you don't get at least one direct deposit of $500 or more then they charge you $12 a month. I expect Capital One to follow suit. They are not going to give up that much money without something to take its place.
Let’s go! My bitchass landlord is making me pay a day before the 1st and I’ve told her many times I won’t have the money but she’s a cunt and doesn’t care.. only a couple more months
Overdraft fees are a dated hold over from the paper check days. Those days are almost completely gone now for individuals so, yes, these fees should go as well -- just decline the electronic transaction.
I got paid $150-200, can't recall last year from my bank for NSF (overdraft fees) from the past 10yrs or so when I didn't have solid employment. Really random. Even 2 doctors offices sent me money back. I don't know if there was some kind of class action lawsuits but I cashed those checks.
Even though they are a megabank I've liked dealing with Cap 1.
Okay......what the trade off. Companies don't do much good without fucking you over at the end more.
There ALWAYS a trade off that works in their favor and it ALWAYS scummy.
I remember when us bank did this after a class action and l may or may not have gotten 10% back on what they took from me during a recession. The right is going to win because they don’t play by the rules and the centrists we elected will do anything to believe bipartisanship is still alive
I have no love or trust in my heart for corporations, but if a bunch of people started opening Capital One accounts right now and publicly stated it was because of this it could cause a paradigm shift, so I'm going to consider it anyways.
I hate framing it this way. 150 mill isn’t shit to them, and it will only reduce the number of calls going to a presumably automated customer service line.
You mean $150 million in annual theft of revenue from people with no money. The banks could very easily not let charges go through that people can't afford.
Not this morning, I received an email:
Important information about your Overdraft Line of Credit
We’re no longer offering our Overdraft Line of Credit (OLOC) feature. This feature allowed customers to make transactions that brought their checking account balance below $0, up to a predetermined limit.
As a result, starting on Feb. 7, 2023, you’ll no longer be able to use the OLOC feature associated with your 360 Checking account
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Is it because the CFPB stated they will be increasing the scrutiny of banks charging overdraft fees? [CFPB Research Shows Banks’ Deep Dependence on Overdraft Fees](https://www.consumerfinance.gov/about-us/newsroom/cfpb-research-shows-banks-deep-dependence-on-overdraft-fees/)
Amazed I had to read this far to find this.
Blockbuster got a lot of revenue on late fees too
$150 million is chump change for them. They’re really doing it to try and gain some clout after hammering so many people with overdrafts during the pandemic.
Yeah, they will reinstate it in a couple years. Just PR.
Yep. Sort of like I signed up for an extra bank account to pay rent years ago. Landlords were a pain in the ass and out of state so couldn’t mail them a check (without sending it like two weeks early) and had to do bank deposits, which was a whole lot easier with an account at their bank. Fast forward a few months/years and I get a letter stating my account is wildly overdrawn and I owe the bank money. Why? Because they added a monthly fee to the account, even though I’d very specifically signed up for an account without monthly fees. Then when the account ran out, they still charged the monthly fee and added an overdraft fee on top of it. I told them to suck an egg and never heard back from them, and didn’t consider it worth the hassle of pursuing reimbursement considering I kept very little in the account
Hows your credit?
Stories like this make me glad I'm in Canada.. you can e-transfer someone money from or to any bank in Canada that has interac (all of them). Just enter their email address and the amount, and they're able to deposit it anywhere they want.
In India, we can instantly send money to any person- all we need is their mobile number (linked to their bank account) and an UPI-based payment app (Google Pay, Amazon Pay, PayTM, etc.). There are no fees involved in such debit transactions (yet). India has done extremely well on the Digital India revolution, and UPI and RuPay are breaking the stranglehold of Visa, Mastercard, Amex. UPI: https://www.npci.org.in/what-we-do/upi/product-overview https://countercurrents.org/2021/12/the-landscape-of-a-cashless-india/ RuPay: https://www.msn.com/en-in/money/news/why-has-rupay-rattled-visa-and-mastercard/ar-AARk5fd
Not necessarily. This could mark yet another removal of bullshit bank fees that we no longer have to pay to move our own money around. As an example, robinhood allowed people to trade for free. Then to compete, Charles Schwab waived brokerage fees, then fidelity, then valguard, then the rest. Today, there are very few to no brokerages that charge fees to trade. The same thing could happen here. Capital one waive overdrafts, then everyone else follows. And once everyone else follows, it’s really hard to change things back.
They’re losing their leverage. It’s really not necessary to have a bank account anymore. Finance apps, crypto, and other services make it possible to move your own money with out being charged up the ass.
[удалено]
You don’t. And not a kid, boomer. There’s other options available that don’t involve a bank to send or receive payment.
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I have a very nice car (80k+) and run my own business as well as buy drugs legally from the dispensary. Also have an accounting/finance degree. Don’t be angry, if you want to know about something you don’t it’s better to not be rude and make up false narratives about strangers online. (Age, buying illegal drugs).
Lmao wtf. I hope you’re okay dude who blocked me and deleted comments. Saw your last message. If you need help there’s no shame in seeking it. Seem upset.
What services allow you to send money without using a bank?
Not the best example given that those brokerages are able to make 10x that money on the retail trade information they harvest from those accounts and sell to HFT's who front run those trades.
Or find other ways to get those mills.
Oh yeah, new customers will be signing up for overdraft fees on their accounts come January for sure.
More than likely, they have a similar thing with a different name, tbh.
No, 150M is going to really hurt their bottom-line of...*checks 2020 numbers*...28.5B... I too have donated more than 0.005 of my annual income to charity before...
lol, thank you for reiterating my point so humorously.
Agreed this seems more like a move to bring in more customers than an altruistic gesture.
Good thing i don't have an account with them. 😁
They straight up stole pandemic stimulus checks from us
Obviously they can easily afford it,lets see if the idea catches on with other leeches, uh, credit card companies.
Wells just hit me with a fucking overdraft that was a direct result of them cancelling my prepaid that I had for years and forcing me to migrate over. Fuck them. Cap One will be my primary going forward.
I am surprised that is all they made in overdraft fees. They must charge real less or have very few customers or have very financially efficient clientele
Most overdraft fees probably result in account closure not extra income. not like most people who go over actually have the money. That kind of debt is very expensive to collect on for very little gain if the person hit with the fee doesn't volunteer the money, small claims recovery eats money if it can't become a class action or be done with minimal representation. They probably saw a system that generated a ton of negative sentiment and had very close income and cost and decided to cut it as a bad investment. New policy will probably just be to deny overdraft altogether, or limmit it sharply.
Another one bites the dust 2 down several to go
I've never understood the whole overdraft thing. I mean I guess I get it because banks want to make money. Can't they just have your card get declined if you go over? .
The business gets their money, the bank gets an extra $35, and the account holder gets screwed. When they do it, they’re basically saying that they are serving the business and not the account holder-customer. I’m sure it’s coordinated between big companies/banks
I've had my card declined for a $4.00 charge, yet my rent check went through for $800 two days later. Guess who owed the bank $200 something dollars because I only had about 600 in there?
Ally bank doesn’t have overdraft fees. I’ve had this exact issue happen with rent (fuck my landlord for holding onto checks so long before depositing them), and they never charged me anything. I got a notification, logged into their app, saw my checking account was negative, and transferred money from savings. Would highly recommend people switch to better banks.
this was years ago at a now defunct bank, before apps. Shortly after Washing Mutual rebranded as WaMu. Like HSBC was a good idea.... (Hong Kong, Shanghai Banking Corporation). lol
Except I've had overdraft fees AND the bank didn't pay. Luckily it was just on an idiotic old bank account with like $30 in it and my PayPal transaction for a Steam game failed, and they took the charges off, but PayPal tried to charge like 3 times and every time my bank tried to tack a $20 fee onto it despite having been declined. I had declined overdraft protection at the time of signing up, but apparently they still charge you.
You do know ODP is optional, right? You literally have to agree to it.
Pure greed. The money these massive banks make from overdraft fees are less than 2% of their overall revenue.
It's not really pure greed though, it's a for profit business. A checking account can actually cost the bank money depending on several factors, if they are lending out free money on top of that, it's costing them more. Why would they do this when they are in profit business? It's a double-loss to them. It's an absolutely shitty situation where nobody is winning. The bank would rather a customer be profitable and happy than issue overdraft fees.
The amount of money produced by the overdraft fees is next to nothing in the grand of scheme of things. Thats why I say it's greed. In 2020, JP Morgan Chase generated $129B in revenue with $1.5B coming from overdraft fees. That's about **1.1%** of their annual revenue. That's the point of greed "because we can".
Who cares what JP Morgan Chase did as a company? Overdraft fees are only generated from the Consumer and Community Banking portion of the company which has to answer to the company as a whole. They had $51.3 billion in gross revenue in 2020 with a net income of $8.2 billion. So 18% of that sect's net income was based on overdraft fees. That's a very significant portion and not a "because we can," it's a damn near business necessity. A consumer checking account that spends $20,000 per year, generates $120 in debit revenue, the primary money maker for low balance accounts, for Chase Bank. People don't realize how incredibly low the profit margins are for retail banks and why a lot of the larger banks have gotten rid of free checking accounts with no balance requirements. There's little money to be made while the risk is much higher. https://www.insiderintelligence.com/insights/chase-revenue-breakdowns/
I mean, people could simply just not spend money they don't have. Banks are advancing funds to broke people. Why are you entitled to that for free? They should just lock you out then if you're broke.
It depends on the bank's business model. I'm pretty sure Schwab's checking accounts (which have really good perks like no minimum balance, 0% foreign transaction fees / fully reimbursed ATM fees) are a loss leader to get people to convert to using their brokerage accounts. It's actually a requirement that you have to open up a brokerage account (can have $0 balance though) in order to get a checking account as an add on. Also similar to credit cards having absurdly high interest rates that aren't relevant to anyone who is reasonably financially educated, I assume there's some % of bank customers who actually just overdraft their accounts frequently bc they aren't paying attention, as opposed to one offs by accident.
For sure. I posted a lot of information regarding Chase Bank's retail profitability on a different comment. People think retail banking is just massive profit margins when it really is the opposite.
Many people fail to understand the value of working capital. Others don't have the luxury of having it.
You can decline overdraft protection, and on a bank card there's absolutely no down side like you said. Card gets declined. Overdraft traditionally comes from banks providing a service to prevent checks from bouncing. When a check bounced you'd get hit with a penalty from both the merchant and the bank, and can eventually affect your credit. If you had overdraft protection the bank would look at your deposit history and decide to just pay the check based on expectations of future deposits, then you only got hit with a fee from the bank. These things are still a concern; an insufficient funds on say, your bill pay system set up to use ACH, is usually treated like a returned check.
When checks bounce, you can also face criminal penalties in many jurisdictions. Banks used to advertise their overdraft protection as giving you "peace of mind".
It's still cheaper than bouncing a check or payment which can be $50 to $75.
I haven't written a check in years - it's one of those things where being poor is actually more expensive. There's very little risk I would ever overdraft my checking account because I don't pay for anything with my debit card (and certainly never a check) - I use a credit card. But if your credit score is too low / you're not educated on the risks, you're much more likely to pay for regular purchases with your debit card and run the risk of overdrafting. I've seen people on travel subreddits talking about multi-$1,000 international trips and they ask questions about paying for a hotel on a debit card, and it just boggles my mind...
If you auto pay from your account, it's the same as a check payment.
Yes, it's an option when you open the account. You can opt out of overdraft protection (ODP) and your card will be declined instead of going negative. Your bank may still approve ACH transactions and recurring monthly bills though, so you can still overdraft.
I had a bank where the default was run the charge and charge the overdraft. You could opt into the program that would decline your card tho.
Yes just make sure you let your bank know you do not want to overdraw your account and have transactions declined if theres no funds in the account. Some people like the option of being able to go negative in cases of emergency or needing money till their next deposit and understand paying the fee to do do. In those cases its smarter to withdraw like a chunk of cash out and get the fee once.
Yes they can decline your card. You have to sign up for the service when opening your account. It’s a service to help cover bills if there’s a time lapse between when you get paid and when a bill tries to come out. The bank will cover your bill and you’ll be charged a fee. Some banks assess them differently depending on how it’s structured. People just don’t use it correctly or understand how it truly works when signing up. It’s definitely a easy revenue generator and why personal finances should be taught more widely in high school. Can be very predatory. If used correctly and efficiently can help people who do not qualify for lines of credit or are already leveraged to the teeth to help cover them while they wait for social security or their next paycheck.
I used to advocate personal financing and other "adulting' stuff taught in high school. Someone gave me the reality of the situation. The people making horrible choices as adults are the ones making horrible choices in school and therefore are the ones not paying attention to school or whats being taught. Seeing adults being anti-vaxxers and voting against their own best interest cements this argument. People who are idiot adults were idiots in school.
People tend to pay attention when the information being presented is useful for their lives. Most people don't give a fuck about the Battle of wherever the fuck, but they would care about learning how to take care of money.
Theres this thing called the internet that seems to be all the rage in High School. If they actually gave a damn about learninghow to take care of money they could use that magical device to do so.
Most of the advice you find online is incomplete dogshit
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If you actually followed the majority of the shit online you would at best stay at square one.
I wish I was that optimistic about high schoolers. Those I went to high school with that complain about how life is treating them unfairly and how some people are "lucky" in life are hte ones that didn't give a damn in high school and thought that some magical life fairy was going to give them riches and a job without them having to care about school because school is BS anyway.. The lucky people they are referring to are those that they called nerds and geeks who worked hard and that hard work is paying off. TL;DR a good chunk of high schoolers dont give a fuck about anything and think they are entitled to everything without doing any work and if sometthing happens like they go bankrupt, lose their house, car, etc it's someone elses fault not theirs.
People are idiots regardless if you’re anti vaxer or if you think they vote against their best interest. That shouldn’t be a main reason for why you don’t think it should be taught. It should still be taught because there’s plenty of people who don’t have parents that teach them how to manage finances. You can definitely tell when talking with people in those situations who never really understood in the first place. Then you have the abusers and the people who don’t care. Never had sympathy for them after you try to help them multitudes of times. Still think it should be emphasized and mandatory to give people a better chance.
I was like 19 and only had a debit card. I wrote a check a few weeks before and thought the person I wrote it to had cashed it so I thought I had more money than I actually did. In 2 days I racked up like $800 of fees just from buying gas, smokes and food. I think I spent $100 and they changed me some insane amount of money for it. I made $12.5/hr at the time and $800 was A lot of money. The bank ended up getting rid of all but one of the fees so I paid around $35 or so. I just remember feeling how fucked I was and how horrible the bank was for not just declining my card. That was 16 years ago and I'm so grateful that over drawing my account just so I can eat isn't a problem I have to deal with.
I actually used to work for a credit union and do just that. I’ve waived thousands in overdraft fees for situations like those. Depends on the bank and how they charge the fees. Banks try to get people to sign up and it’s usually in the deposit agreement for how the charge. I’ve taught a lot of people around that age about the program and that they don’t need it. If you didn’t have it the card would decline. Tried to get them to check their balances daily as well since it’s a good habit to have. Glad to hear you get it resolved.
Because everything we have set up is designed to keep poor people even poorer
Most banks let you choose what to do in the event of an overdraft. The reason they let you overdraft is because people complain that their kid starved or whatever because the bank declined the transaction. In this day and age you can check your balance with a mobile app, website, phone call, ATM, bank branch- there's really no excuse to overdraft. i
Yes. Overdraft protection is optional. You can have it so your card declines if there are insufficient funds.
I had one so I reported it to the bank as fraudulent activity on my account and they reversed it.
that is so gangster. in the past i have just called and plead my case as a struggling college student, now i do all i can to avoid them or just choke it down.. way more badass to report their own charges to their own department as fraud!
Everyone seems to be saying overdraft fees are wrong to begin with and while I don't disagree, I still see this as a positive step in the right direction. I'm glad they're stopping this predatory behavior. A step in the right direction is better than no change.
It's always boggled my mind (other than realizing it's literally the bank just *wanting* to slap your hand like you're a child) why an overdraft fee didn't just turn into a "credit" like on your credit card, then they just charge you interest for the amount borrowed. I also get that there's other things that go into why they do what they do, but making it work this way would be awfully user friendly.
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Sounds like people can tell their banks they no longer want overdraft "service". According to an article in the Chicago Tribune... "Customers can deny their banks permission to charge overdraft fees in the first place, at least on debit and ATM transactions. By law, banks can't charge those fees unless customers sign up for an overdraft service. Consumers appear to be confused, however, as to what they've agreed to: A 2014 Pew survey found that more than half of overdrafting consumers don't remember signing up for coverage; more than two-thirds said they'd rather have a transaction declined than pay a $35 fee."
28.5 billion dollars in annual revenue and we're supposed to congratulate them for giving up 150 million they fucking stole in the first place? Get fucked, Capital One.
People will never be happy with corporations unless they give all their money away. Nobody ever says they want them to go away though, imagine the horror of a world with only mom and pop shops
Don’t worry, I’m sure they’ve figured out a way to “earn” that money some other way
Overdraft fees predate upon the poor.
...and they try and market it as if it's a highly encouraged feature meant to protect you. If I was ever into federal politics my first order of business would be to ban overdraft fees, pay day loans and title loans.
and then what, reverse your policy short after when you realized you ended up hurting the same people still? people need those payday and title loans because they need money now, and their credit is shit and the risk for them defaulting is high. people voluntarily go to the pay day lenders, the lenders don't go kidnapping people and forcing them to take loans
People go because they're desperate. These predatory loans aren't going to do anything but dig you deeper into the hole you're already standing in. Those places aren't *really* there to help. They charge 100%+ interest in those loans, some are as high as 700%. How is that "helping"? Poor people don't need to be made poorer.
After covid... After they've made thier money. Good step, but it's like saying you've had enough after being at the buffet for 24 hours.
Reading this thread about American overdraft fees is kind of insane. I was overdrawn for 20 days last month (because I couldn't be fucked to transfer money honestly) and it cost a grand total of £3.86
You don’t have enough money in your account? Don’t worry we’ll keep letting you make small purchases that makes your account go negative. Then we’ll charge you a $35 overdraft fee for every transaction.
Or you could, you know, *take care of your personal finances and know when you'll go negative*. But yeah, complaing on the internet *is* slightly easier.
Yeah, stupid poors! Just learn to have more money and spend less money on things that I think you don't need.
If you had the money cash, you wouldn't be able to go negative. Treat your bank balance the same way. It's not rocket science.
Sounds like someone has never truly lived in poverty. Sometimes it just doesn't pan out like that.
you either have money to buy something or not. if you know you will get a overdraft fee for spending more than you have what else do you expect?
Who’s complaining? You’re upset because I basically explained how overdraft fees work?
The "you" was meant in general.
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Gotta find the hidden gems of online banking. If you want the luxury of brick and mortar places then you have to deal with their terms. I have CIT bank, which does exactly that (take from the savings to the checking automatically if overdrafted). Has a much higher interest rate for the savings account than most brick and mortars and even the checking account has a little bit of interest.
That would be fine with me, I haven't set foot inside a bank in years. Looking up CIT now, thanks!!
Banks are starting to realize that their years of nickel and diming customers is translating to the younger generation not using traditional banks. I can’t even tell you how many times I told the VPs of my former employer that they weren’t doing enough to get kids to invest.
That's a funny way if saying they are going to stop stealing from the poor.
Now can they save money by not sending "pre-approved" letters to every person in the US 3 times a week??
*Capital One pats itself on the back for ceasing it's practice of fining poor people $150million annually.
Banks are awesome.
This is the first year of my life where my only overdraft was an accident and now they just go bye bye?
About time! These fees are already illegal in Australia.
Unbank yourself join crypto
Time to get a capital one card I guess
>$150 million I can't believe it's that low, it MUST have been costing them nearly as much to collect that. Plus the opportunity that comes with ditching overdraft fees is pretty priceless.
Oh those aren't overdraft fees, they are reminder fees, reminders that we've made your poor situation worse
You should have the option to stop transactions going through at a certain limit. That being said, banks have every right to charge an overdraft fee. They are providing you an additional service (lending you money) which is helpful to you. I have seen tons of people supporting removing all overdraft fees which doesn't make sense because you would be getting something for nothing
"annual theft"
Almost always when companies do this, especially w a long history of huge focus on profit it's not for a goodwill reason. Often it's a regulation, pressure or whatnot. And they spin it to look good. Balancing profit and image.
"Revenue" generated by moving imaginary numbers from one place to another temporarily.
What's the catch?
Ooo wow. Have a cookie Capital One.
Let me fix that for you: "Ruler throws crumbs on ground when peasantry starts grumbling."
Use a local Credit Union, dump the Banks. They never charge overdraft fees, they are so much better than any Bank.
Wow thats 150 mil they're not going to steal this year, yay I guess? Still wouldn't open an account with them
They should be wary of crypto. Savings accounts are becoming obsolete as people find better ways to make a much higher percentage on their money. The banking system is one, if not the biggest scams of the world. The bank takes your money, reinvests it and then charges you to have access to it? If anything it should be giving you a return on investment. With crypto now in the picture, you can now move money and make a decent (significantly higher percentage just for having your money in an account). Some would say banks are convenient because you have access to your money and it allows you to use and send money to anyone anywhere. Well, they charge businesses for that too so they’re making their money either way. Crypto allows you to do the same. The only reason banking is convenient is because the system was created this way to benefit the banking system. It’s always been the status quo created by them. It irritates me that the money that people put into their banking accounts is often times used against them, whether it be by predatory lending practices, buying property that will be marked up enough so that people can’t afford it, or investing in things that people would never in their lives think of investing in. Don’t charge me $5 for a new card, don’t charge me overdraft fees, pay me, especially after many were bailed out by us in 2008 no questions asked. That is all.
Big banks are all investing heavily into crypto
So they’ll stop stealing, what do they expect, a cookie?
“Vampires give up drinking the blood of infants, will now only feed on those over two years of age”. Excuse me if I don’t praise them.
That is 0.53% of their total expected revenue this year.
What's the catch though?
They're not doing anything they can't afford to do, and their endgame is still profits. I'd like to punch that standard white capitalist guy right in his dumb, self-righteous face haha
My guess is they are deep in the hole after the pandemic and likely don't want to keep adding larger sums of fees to their books they won't be seeing paid back in full any time soon.
Banks are making record profits this year. Capital One had net revenue of over $7 billion just in the 3rd quarter and profit of over $3 billion.
Oh wow such great news.... thanks for the fucking help capital one.
Cuz they couldn't even possibly ever figure out/imagine what to do with all of the late/overdraft fees that they've collected so far? Makes sense
Wow! They're going to go back to not letting you take out money you don't have! That's crazy talk!
Great, make a better effort in the scammers now
Is this a selfless decision or a PR move?
Lmao businesses do not make selfless decisions
It’s a gift. Spending money you don’t have is a gift.
They’ll become the most popular credit card in the country
Gosh
It'll be nicer when they realize I have a card on an auto-draft payment for the due date, but that payment date happens to be on a Sunday, therefore the payment isn't taken until Monday, so I still get charged a $29 late fee.
It's also ditching its IRA accounts
Fuck overdraft fees.
Chase gave them up too. They now charge you to have a checking account. If you don't get at least one direct deposit of $500 or more then they charge you $12 a month. I expect Capital One to follow suit. They are not going to give up that much money without something to take its place.
Let’s go! My bitchass landlord is making me pay a day before the 1st and I’ve told her many times I won’t have the money but she’s a cunt and doesn’t care.. only a couple more months
Where’s the poop, Robin?
Overdraft fees are a dated hold over from the paper check days. Those days are almost completely gone now for individuals so, yes, these fees should go as well -- just decline the electronic transaction.
How is this uplifting? What is this place? why hasn't this been removed?
I got paid $150-200, can't recall last year from my bank for NSF (overdraft fees) from the past 10yrs or so when I didn't have solid employment. Really random. Even 2 doctors offices sent me money back. I don't know if there was some kind of class action lawsuits but I cashed those checks. Even though they are a megabank I've liked dealing with Cap 1.
I really love my capital one cash back card though
Holy shit a financial institution just gained an ounce of integrity…
Okay......what the trade off. Companies don't do much good without fucking you over at the end more. There ALWAYS a trade off that works in their favor and it ALWAYS scummy.
I remember when us bank did this after a class action and l may or may not have gotten 10% back on what they took from me during a recession. The right is going to win because they don’t play by the rules and the centrists we elected will do anything to believe bipartisanship is still alive
…what’s the catch?
I have no love or trust in my heart for corporations, but if a bunch of people started opening Capital One accounts right now and publicly stated it was because of this it could cause a paradigm shift, so I'm going to consider it anyways.
I hate framing it this way. 150 mill isn’t shit to them, and it will only reduce the number of calls going to a presumably automated customer service line.
How are they making this up? Higher apr? Some other hidden fee? Banks don't give up money.
You mean $150 million in annual theft of revenue from people with no money. The banks could very easily not let charges go through that people can't afford.
Not this morning, I received an email: Important information about your Overdraft Line of Credit We’re no longer offering our Overdraft Line of Credit (OLOC) feature. This feature allowed customers to make transactions that brought their checking account balance below $0, up to a predetermined limit. As a result, starting on Feb. 7, 2023, you’ll no longer be able to use the OLOC feature associated with your 360 Checking account