The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.
Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
It’s not free borrowed money but I’m sure someone with poor financial literacy may see it that way (which is like the majority of young people). If you over drafted $30 it is a 10% fee, and that’s every time you run your card buying something. It’s a fee you will pay with your future potential wealth.
My parents removed overdraft from my account after my sister overdrafted her card all the time in HS. It should not be on by default and it should be legally mandated that you have to sign a waiver understanding that overdraft is a shitty fee designed to keep you from ever building wealth or savings.
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My problem when i was younger was i didn’t pay attention much to my bank account and would unknowingly overdraft. So i would get hit with 10 over draft fees out of nowhere for buying gas here, a pop there, a drink at a restaurant, just small charges that if i were smart didn’t need and would have just done what you did. It’s the un anticipated overdrafts that killed me when i was younger.
Agreed. That’s an option on my acct. Unfortunately it doesn’t stop majority of those with poor financial literacy to go nuts with it. It would be best if the option did not exist at all.
The idea of “owing” has changed a lot the last 100 years. Used to be ok to have a little debt. Meant you weren’t going anywhere, you were part of the community, invested. Thats changed now that you owe some obscure billionaire or hedge fund down the line. Means nothing. Changing the idea of how we handle debt as opposed to not letting people acquire it feels more appropriate.