Anybody fully understand overdraft policies ?

[RunningBum]

sorry, somehow didn't see youbet's post that made the same point.

[donheff]

Quote:

Originally Posted by ERD50 Ddave5, just so you don't think you are crazy or are not communicating properly - I hear you and completely understand what you are saying and why you are asking. Even the most responsible among us can slip up from time to time. The nature of a debit card and the immediate withdrawal increases the likelihood of a slip up. For example, if I slip up and write a check with ISF (though I never have), I may think about it later in the day, go online, and I can transfer funds from my tied MM or savings account instantly, and very likely cover it before it hits. Not so with a debit card, right? Damage does instantaneously. So, you want a default backup plan for your generally responsible child. I get it. Like you, I would much prefer to have the attempted charge declined, rather than incur fees. Bottom line, I think you just need to ask and find a debit card that allows this mode to be selected. You got me curious, I think I will check out if our CU offers this for the debit cards my kids have. Thanks for posting this, it is a useful discussion for many of us. -ERD50

+10! Sure kids should learn how to protect themselves. But most kids screw up now and then and the banks are acting like predators lying in wait for them. They make a fortune from newbies (kids) and from people living paycheck to paycheck. The card companies and banks are exploiting the weakest among us for profit. Then they turn around and try to guilt people for "writing" a check they can't cover - hypocrites. DDave - If you can find a bank that will do it your way dump the jerks you are with now.

[ERD50]

youbet & runningbum - yes, I thought about that issue (being declined just when you really need the money) as I was typing. Seems like the best of both worlds would be overdraft protection with a warning on the terminal. Then the user could say - ooops, I guess I don't need to pay an added $35 for this pack of gum, but maybe I'm OK with the $35 to catch the last train out.

Wrong tool? OK, so maybe a credit card is a better choice for kids. We can explain that model to our kids and monitor it online (if we feel the need - not going into the 'parenting' topic - personal decision/circumstance) and they can get money up to the credit limit (IIRC some cards decline you at the credit limit, some will charge a fee), which may or may not be more than what they have in their account in an emergency. So if it is the end of the billing cycle, they have a $1500 limit, and have charged $1450 at that point, that $60 train ticket might get declined, right?

My credit limits are so high ( 4-5x my typical monthly bill) I can't imagine hitting them w/o some serious pre-thought, but I know my out-of-the-nest son has a pretty low limit. I'll mention it to him to ask for an increase, and check into what happens if the limit is hit.

-ERD50

[LOL!]

Suppose debit card overdraws account and child gets slapped with a $35 fee. Is that not a learning experience? More learning is to get them to call up and request that the fee be removed. That's part of life as well. Make sure they read "How to Win Friends and Influence People" before the phone call.

[youbet]

Quote:

Originally Posted by ERD50 Wrong tool? OK, so maybe a credit card is a better choice for kids.

Actually I was thinking the correct tool in the example stated would be CASH. A $20 check earned by cutting grass doesn't clear in time for junior (or whoever) to use his/her debit card to pay for a $7 movie and generates a $35 overdraft fee? Why launder those levels and types of income/outgo through a debit card? Don't have $7 in your pocket? Don't bother going to the movie. The chance of being charged a $35 overdraw fee or of having the card unexpectedly rejected is reduced to zero.

[Rambler]

DS overdrafted his debit card about a month ago (put too much in the savings acct a couple weeks earlier and wasn't paying enough attention to his balance). No charge from the bank, no fee for overdraft protection. His acct is a Student Account at Wachovia, and is tied to my acct so I can fund some of his educational expenses thru there.

PARENTAL ADVICE WARNING - I chewed him out for it, because my name is on the account as well (so I can easily handle above noted funds transfers), and his overdrafts could affect MY credit rating. Told him if he did that again, I was taking myself off the acct, and that he would be responsible for self funding ALL of his educational expenses. END PARENTAL ADVICE

FWIW,

R

[LOL!]

So account was overdrawn, did bank use the savings account as a "no-fee overdraft protection" or did bank use another one of your accounts as a "no-fee overdraft protection" or did son have to manually move money from savings to checking to cover the overdraft himself?

In the world of credit, bank balances and credit are separated. I don't think an overdraft on your checking has anything at all to do with your credit score. In the same way, a million dollar checking account balance will not affect your credit score at all.

[Rambler]

His savings account is in a different bank. His overdraft came over a weekend and his pay transferred in on the monday after the overdraft occurred. Non of my accounts were affected. In reality, his SS# is on his account, so it should not really affect my credit score. However, I have read that overdrafts on your checking accts DO in fact affect your score (even though this one "probably" would not have "really" affected my credit score, if I ever needed it, and my credit was thoroughly scrutinized, this theoretically "could" affect it as my name is on the acct). The point is that I wanted him to understand that it carelessness in using your debit card has farther reaching consequences than he knew (at the time of the event).

R

[ERD50]

Quote:

Originally Posted by youbet Actually I was thinking the correct tool in the example stated would be CASH.

Gotcha, and agreed. I was thinking back to the post about the kid stranded at the train station, and pictured a college student with higher cash flow needs (pizza, beer, even books probably cost a lot more than they did 30 years ago!).


-ERD50

[LOL!]

OK, now look at what you've gone and done:
Bank of America Ending Overdrafts on Debit Cards - NYTimes.com

[Delawaredave5]

Quote:

Originally Posted by LOL! OK, look what you gone and done now: Bank of America Ending Overdrafts on Debit Cards - NYTimes.com

LOL - thanks for posting. So I might not be nuts after all.........

I love the quote below - wonder what the bank paid in market research studies to get that conclusion........

“What our customers kept telling me is just don’t let me spend money that I don’t have,” said Susan Faulkner, the bank’s deposit and card product executive, who said the overdraft changes were part of a broader push to build trust among its customers. “We wanted to help them avoid those unexpected overdraft fees.”

[clifp]

Quote:

Originally Posted by Delawaredave5 LOL - thanks for posting. So I might not be nuts after all......... I love the quote below - wonder what the bank paid in market research studies to get that conclusion........ “What our customers kept telling me is just don’t let me spend money that I don’t have,” said Susan Faulkner, the bank’s deposit and card product executive, who said the overdraft changes were part of a broader push to build trust among its customers. “We wanted to help them avoid those unexpected overdraft fees.”

Ack that does it. I am selling my few remaining BofA shares. How will banks ever make a profit if they don't gouge get reasonable fees from suckers customers for stuff buried in fine print valuable services?

It is a sad day for American banking when BofA of all institutions, stops trying to screw their customers. Fortunately, I feel confident that this isn't a real change in attitude but only the threat of new legislation. Hopefully, BofA will find new and clever ways to generate fees.

[traineeinvestor]

Quote:

Originally Posted by clifp Ack that does it. I am selling my few remaining BofA shares. How will banks ever make a profit if they don't gouge get reasonable fees from suckers customers for stuff buried in fine print valuable services? It is a sad day for American banking when BofA of all institutions, stops trying to screw their customers. Fortunately, I feel confident that this isn't a real change in attitude but only the threat of new legislation. Hopefully, BofA will find new and clever ways to generate fees.

Without a word of a lie, I hope the banks do keep charging fees - lots and lots of fees.

As an investor in equities (either directly or through collective investments such as mutual funds, etfs, pension plans etc), it is in my interest for the banks to be profitable. I want my investments to do well enough to support my early retirement. Lower bank profits means a lower return on my investment with a knock on effect for my retirement plans.

The alternative to either lowering fees or reducing profits is to widen the spread between borrowing costs (deposits) and lending rates - either depositors get less or borrowers pay more (or both) - neither of which is a good result for most of us.

Needless to say, I have never paid an OD fee and have zero cost OD protection.

(That said, I agree that banks should offer the options of having the transaction refused for insufficient funds or give a warning when the account will go into OD.)

Apologies for threadjacking the threadjack.

[clifp]

Well since my post was mostly tongue cheek, I'll make an alternative suggestion as to how banks could make money to satisfy shareholders.

For a start they could make loans only to people with a proven history of paying them bank. For people with lower credit score demanding higher levels of collateral and higher interest rate would go a long way to maintaining profitability Actually, two of the bank stocks I own (BB&T, and Wells Fargo) mostly did this.

In the specific case of Bank of America, Mr Lewis the CEO, would be smart to not overpay for acquisitions like he did with CountryWide and Merrill Lynch. When at all possible avoid using BofA stock as currency, to start with I hope he reads Warren Buffett's letter this year on the subject of acquisitions.

Finally, when he does take over a company clamping down on excessive compensation and absurd office remodeling expense, would help offset the loss fees from overdraft "protection".

[Katsmeow]

BOA will do an ATM only card. Debit cards have been a huge problem for my son (yes, yes, yes we told him to record his expenditures, not to spend money that he didn't have, etc. But did he listen? No). The only thing that has finally worked is for him to not have a debit card at all and to have only an ATM card.