I’m not gonna defend banks very often, but in fairness, it’s opt-out because most people prefer a $35 fee to having a payment rejected. There’s multiple reasons for that:
Payment Rejection or “returned check” fees usually exceed $35 and have worse consequences
They don’t always know whether you’re about to spend more or less than you have until they’ve committed to pay that for you. Most people would not prefer they reject all holds at places like gas stations just because you don’t have enough money on hand to cover the maximum.
Emergencies are just that. If you keep a perfect checkbook (lol), then you’re overdrafting because whatever is happening to you is worse than the $35 overdraft fee.
Now to put on my “but fuck banks” hat:
The REAL problem, IMO, is that the fee amounts to usury and should be regulated like any other debt. In most cases, your overdraft is equivalent to thousands of percent interest on the overdraft amount. Some “more honest” banks will limit your fee to the total amount overdrawn, making only 100% in fees (still over 36,000% effective APR if it’s all reconciled the next day). A few banks have come up with “small overdraft forgiveness” where they’ll just bloody not charge you a $35 fee over a dollar or two (like the guy in another thread has). But the DDA/overdraft market is so badly regulated, they can basically do whatever they want and then can collude to keep you from opening a bank account with another bank.
I don’t know if that’s really true anymore. It certainly used to be true that this was a service when the fees were rare and consequences serious but this is another case of enshittification where the fees became a profit center so banks changed policies to charge more of them
That I’m on board with. I worked IT at a company that processed overdraft debt and it was a breeze because the Banks have disgusting amounts of leverage against the poor customer.
But I also think this is a case of “we don’t care about the poor people, even enough to come up with ideas to hurt them”. They came up with this process that works well for middle-class and provides reliable profits, and they won’t actually look into the fact that it fucks with poor people because they don’t care. A few banks were giving my previous employer up 40% of their overdraft revenue to collection companies for years without a second thought. It’s not a lot of money for them, but it’s profits and they don’t care to change what makes money. And for most lower-middle-class folks, a rare fee because a bill doesn’t quite overlap with a paycheck is “better than being SOL”
I’m not gonna defend banks very often, but in fairness, it’s opt-out because most people prefer a $35 fee to having a payment rejected. There’s multiple reasons for that:
Now to put on my “but fuck banks” hat:
The REAL problem, IMO, is that the fee amounts to usury and should be regulated like any other debt. In most cases, your overdraft is equivalent to thousands of percent interest on the overdraft amount. Some “more honest” banks will limit your fee to the total amount overdrawn, making only 100% in fees (still over 36,000% effective APR if it’s all reconciled the next day). A few banks have come up with “small overdraft forgiveness” where they’ll just bloody not charge you a $35 fee over a dollar or two (like the guy in another thread has). But the DDA/overdraft market is so badly regulated, they can basically do whatever they want and then can collude to keep you from opening a bank account with another bank.
I don’t know if that’s really true anymore. It certainly used to be true that this was a service when the fees were rare and consequences serious but this is another case of enshittification where the fees became a profit center so banks changed policies to charge more of them
That I’m on board with. I worked IT at a company that processed overdraft debt and it was a breeze because the Banks have disgusting amounts of leverage against the poor customer.
But I also think this is a case of “we don’t care about the poor people, even enough to come up with ideas to hurt them”. They came up with this process that works well for middle-class and provides reliable profits, and they won’t actually look into the fact that it fucks with poor people because they don’t care. A few banks were giving my previous employer up 40% of their overdraft revenue to collection companies for years without a second thought. It’s not a lot of money for them, but it’s profits and they don’t care to change what makes money. And for most lower-middle-class folks, a rare fee because a bill doesn’t quite overlap with a paycheck is “better than being SOL”