Opting in

[pecunium]

As of 15 August, your bank can't just give a "courtesy" overdraft with your debit card.

That courtesy was always dubious, as it came with a punitive fee, and there was no way to know that it had happened, so the fees might add up.

Let me rephrase that, the fees did add up, for the banks, to the tune of somewhere between 10-15 billion dollars a year. That's an awful lot of money taken out of the economy, just so someone won't have an embarrassing moment when they discover they've forgotten how many minor swipes they've made.

It's not as if that sort of thing is accidental either. Those ad campaigns pushing one to use one's "VisaCheckCard" rather than that pesky cash, or even worse, a check, those tie into this. The idea that cash takes too long (which, trust me, as a guy who's been running a till in the modern age, cash is faster than the card. It doesn't take time to be approved).

Which goes hand in hand with things like the policy of, biggest check first (and I have read of at least one case of BofA putting a check which they were going to bounce into the ledger as a debit, thus putting the account into the red, bouncing checks which would have cleared, then finishing the act of bouncing the first check; which seems as though it ought to be fraudulent, but isn't).

So the banks are putting on a full-court press, playing on people's fears to get them to sign on and asked to be pillaged. There are some companies, such as Action Marketing which target the poor They promise to help banks (as they show a countdown timer) to register:

Millions of dollars are at stake...What will it take to get your customers to opt-in?

The clock is ticking...you know that...so how will you get stubborn overdraft users to opt-in? Have you even started?

Then we'll talk solutions. What you need to do to acquire the highest number of opt-ins, especially from the most important group — the regular NSF users.

Care to guess who those people are? It's not the rich.

BofA looks to be taking the high road. They have said they will no longer allow such overdrafts. I wonder if this isn't a cynical ploy. The people who might be more likely to, out of some sort of attenuated solidarity with the poor, protest at this sort of thing going on, esp. should there end up being a backlash against banks who continue the practice, are those who have real money to deposit.

On the other hand... the cynical side of me wonders, does Bank of America's large investment in PayDay Loan companies have anything to do with this decision? If people who have been taking advantage of having that sort of coverage, have been using it to bridge gaps (at heinous rates, some end up totaling out in the range of 3,000 percent interest; and that's if they paid off in two weeks. I don't know what the bill would look like if one went longer), might they not move to Payday lenders?

Since BofA was, as such things go, one of the better places to be, if one hit an overdrawn debit card situation. They only charged about 1,000 percent APR.

So, while I am glad BofA, as a huge bank, is forgoing this line of fleecing the public, I am still not so sure they aren't looking to make some money from low-hanging fruit, while polishing their image, and looking better than the rest of the actors in this game.

Comments

[sinboy.livejournal.com]

Any idea how the voting went on this law? I can't see to find it.

[zeeth_kyrah]

The habits and attitudes of large conglomerate banks, and banks based in locations where the people are all about scrabbling cash out of each others' pockets, keep me focused on using local and small regional banks which actually give a flying cowflop about more than the top one percent of their customers.

I hope someday to be worthy of a credit union, but I have no idea how to locate or join one that isn't employment-based (such as the IU Credit Union, which presumably is for employees and perhaps some students).

[kalmn.livejournal.com]

check google. you seem to be presuming incorrectly. i don't know precisely where you're located, but iucu seems to take anyone.

[pecunium.livejournal.com]

There are any number of credit unions which one may be able to join. There are two in my local area which are based on zip-code.

Mine is regional; but if one lives out of region, but does business in the region, one may join. There are some drawbacks... I discovered that I can't make deposits when I am in Tenn., because the network which does that, seems to not have the same sort of rules in Tenn.

But that I live some 200 miles from my nearest branch has not been a problem.

[daveamongus.livejournal.com]

Out of curiosity, have you checked out USAA? I'm guessing you must have heard of it by now, but they're pretty damn convenient for being local to no one, and thus local to everyone. I like best being able to scan or, with my Droid, photograph my checks for deposit.

[pecunium.livejournal.com]

I have. I use them for auto/bike insurance, and I have credit card through them, but I prefer a local credit union, to a larger (even if specialised) bank.

[lexica510.livejournal.com]

Check around — there's very likely a credit union in your area that you qualify for. My own credit union's policy is that "our membership is open to all who live, work, or worship in Alameda, Sacramento, San Diego, Santa Clara, or Yolo County."

[pecunium.livejournal.com]

Why is San Diego in that (the geographic outlier is sort of dramtic)?

[lexica510.livejournal.com]

I was wondering about that. I assume they expanded it (to "live, work, or worship in" the listed counties) from more-restrictive requirements, but I can't figure out what they were expanded from. According to their website, they started out in San Diego and then expanded to include the others.

[don-fitch.livejournal.com]

I'm something of a negative fan of BoA -- when I first started working in Covina, I noticed that old-timers would frequently spit on the sidewalk in front of the BoA entrance as they walked past, and asked my boss (born here) about it. Seems that it became the biggest bank in California (partly while it was still The Bank of Italy) by means of foreclosing on farm & orange-grove mortgages as quickly as possible, during The Great Depression, unlike most other banks, so that when the economic situation improved they had immensely valuable assets. I gather that they're continuing this practice, in the expectation of making another such killing. My experience with them was that, yeah, they would do things like that. As would Wells-Fargo, and WaMu/Chase, more recently.

I'm reasonably satisfied with the LA Civic Center (Government Employees') Credit union, and expect to switch some more of my savings/investment money there in the near future, at least up to the maximum covered by the FDIC insurance.

[daveamongus.livejournal.com]

I was always ... bemused by those Visa Check Card commercials where they showed cash always slowing down the intricate machine of commerce. It reminds me of those "the most incompetent people ever" segments of infomercials.

[sylphslider.livejournal.com]

Interesting history, thanks for sharing.

I hate BofA and stopped being their customer when I was 20, after they unfairly put me on ChexSystems and I had to threaten to sue. They also stole $750 from a good friend of mine through some 'irregularity' and she wasn't able to give it back. Since she's not in the habit of lying or being frivolous with money, I believed her over them. And, they've screwed my bf in terms of the credit card he took out with them.

Now, given that I'm a historian, I have even more reason to hate them. I'll have to research this to get the whole story. :P

[sylphslider.livejournal.com]

I'm a bit confused. So if you don't opt-in, your charge just bounces automatically? Or it's declined? Or what?

[kodi]

It will be declined. Many banks were initially rolling it out as "a way to avoid embarrassment of declined transactions," but that language seems to have been phased out a little lately - now they're pitching it as, for instance, "a beneficial safety net."

Personally, I'm a very shy, easily embarrassed person, but if I could make $25 enduring the shame of having a debit charge declined, I'd be rich.

[pecunium.livejournal.com]

It's declined.

The way the are selling this is the fear of change, "if you don't opt in, your account won't work the way it does now.

[houseboatonstyx.livejournal.com]

Yes...? And are we supposed to believe that the fine print in what we opt-in to will really work the same as one's account works now? I expect they would stick in some zingers.

[houseboatonstyx.livejournal.com]

I finally walked into my new very local, very small bank and told them if I tried to charge/debit something and didn't have enough money I wanted it to bounce/decline and not to have to pay anything to the bank for that. She said that's what will happen if I don't opt in to anything.

The stuff Chase (an old bank of mine) sends out is very confusing, misleading.

[pecunium.livejournal.com]

It's declined.

The way the are selling this is the fear of change, "if you don't opt in, your account won't work the way it does now." That of course fails to note just what one's options are.

[eagle]

I believe that with pay-day lenders, you pay all the interest in advance. Basically, you write them a check, they hand you the same amount of money minus the interest, and they cash the check two weeks or whatever later. So unless that check then bounces, there's no way for the interest to increase over time. (I suspect you're pretty screwed if it bounces, though.)

Pay-day lenders get a lot of deserved bad press, but in some respects they're more honest than credit card companies. They tell you very explicitly up-front how much total interest you're paying and you see it deducted from the money they give you on the spot.

[pecunium.livejournal.com]

What they don't tell you is that they have very carefully tailored the business plan to make sure you can't keep up, and so what the average user of a payday lender ends up doing is taking out another loan, next week, to cover the cost of the loan from this week.

They may be honest, but no more honest than any other loan shark.

[soon_lee]

I'm lucky to live in a country where the banking industry is more tightly regulated; a few years ago, one of the credit card companies that did an opt-out credit extension offer was criticized for their efforts.

I guess the thing that bugs me is that the offers of credit or loans target those most financially vulnerable.

Thanks for the signal boost!

[dmh-phoenix.myopenid.com (from livejournal.com)]

I'll note that Suntrust (Virginia-centered) is *not* taking the high road, though they're not quite as sleazy as some of the stories I've been hearing. I'll have to check out the local credit unions, but I suspect I might have minimum-balance issues.

Re: Thanks for the signal boost!

[pecunium.livejournal.com]

My credit union has a $50 minimum, but I've had/known of accounts with a $5 requirement.