Enough is enough. Let’s abolish overdraft fees, writes columnist Davidlaz. 'They’re little more than cash grabs, serving no purpose but to fatten bankers’ already bulging pockets.'
Discover announced this week that its online bank will no longer charge a number of fees, including one for insufficient funds. Other banks should do the same.
“Banks have turned overdraft fees into a revenue-generating machine,” said Rebecca Borné, senior policy counsel for the Center for Responsible Lending. “It’s going to take comprehensive regulatory reform to change this.” More than $65 billion of that income came from “non-interest” sources — which is to say, for the most part, fees.
Along with eliminating a host of fees, Discover said it will offer checking and savings accounts with no monthly maintenance charges, as well as free orders for checkbooks and replacement cards. The industry defends overdraft charges by saying many people appreciate not having checks bounce or payments declined, and there’s a cost to providing such a service.
By law, banks are required to get customers’ permission before levying such charges, meaning that you’re supposed to opt in before overdraft protection will be provided. But consumer advocates say banks often hide such approvals amid other transactions, causing many people to inadvertently sign off on overdrafts .
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