“Banks call it a service,” the president said. “I call it exploitation.”
The Biden administration unveiled a new rule Wednesday aimed at slashing bank overdraft fees to as low as $3, a move the president said would help end abusive practices by financial institutions.
Under the proposal, banks could continue to charge fees when a customer’s account falls below zero, but either at a price in line with the bank’s actual costs to administer the overdraft or at an established benchmark created by the new rule.
The Consumer Financial Protection Bureau (CFPB) proposed potential fees of $3, $6, $7 or $14 and is seeking feedback from banks and the public on what would be appropriate. Current overdraft fees often push $30 or more, taking a significant bite out of low-income accounts.
See, your assertion rings as false for me, because as an American I’ve definitely run into things with my debit card where the problem was that the transaction was being treated as a check in the background, which meant it takes up to 3 business days to get through the check clearinghouse (even if you paid with your debit card and not a physical check), and during that period, that pending transaction doesn’t even appear on your online statement. (In modern days, Venmo is bad about this, but in the past it was random places that could do it to you.) So if you didn’t keep the mental tally of transactions and didn’t have much money, it was very easy to forget an invisible pending thing and accidentally overdraft.
And, obviously, credit cards don’t do the check clearinghouse thing, that’s a debit card thing.
Given the things fucking up the gears is the check-style old-timey clearinghouse shit going on in the background, I fail to see how making the card/transaction even MORE “debit-y” would fix it.
So you, or me, or perhaps both of us, don’t understand some significant differences in how your country processes debit transactions behind the scenes compared to mine.
Maybe you should elaborate how debit works in your country?
I guess it does work differently, and it depends on the bank. I’m in Europe. When I make a payment, let’s say Saturday, that will actually be processed on Monday, the sum doesn’t show up in my account anymore and I see it as a pending transaction. So I can’t spend more than I have on a debit account.
The only time I would owe the bank are card reissue fees every few years, which could take the balance into the negative. But if you have multiple accounts with the same bank (including savings accounts) the fee is automatically withdrawn from other accounts. Also, no fees for the negative balance if it’s a debit card. You can have it pending for months without issue.
I actually take advantage of not being able to overdraft by having a separate account and attached card that I only use for online payments. It normally stays on 0, and I only move money there before making an online purchase. If my card details are leaked / stolen, transactions would get refused (no money in the account), I would just close the card and request another one.
PS Given the downvotes, I understand I might have a wrong understanding and might confuse banking terms a bit, but I don’t live in the US and I certainly wasn’t taking the side of banks regarding the overdraft fees.