this post was submitted on 17 Jan 2024
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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.

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[–] gearheart@lemm.ee 9 points 9 months ago (3 children)

Heck if overdraft fee's are only 3$ I would have over drafted all day when I was younger. That's free borrowed money

Honestly banks should just block debit cards and return checks if it's short by any amount. Get rid of all that funny business all together.

[–] DrDr@lemmy.world 14 points 9 months ago (2 children)

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.

[–] gearheart@lemm.ee 2 points 9 months ago (1 children)

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.

[–] WhoPutDisHere@lemmynsfw.com 1 points 9 months ago

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.

[–] cucumber_sandwich@lemmy.world 5 points 9 months ago (1 children)

Do they charge a flat fee in the US for overdrafting your account instead of absurd interest on the overdrawn amount?

[–] scottywh@lemmy.world 3 points 9 months ago

Typically yes... Even my Credit Union has a $35 fee for the first overdraft in a given time frame and then it goes up by $5 for each subsequent overdraft in that same period.

The same credit union will, as a courtesy, refund up to 3 overdraft fees per year but only if you call in and basically beg a customer service rep because you're aware of the policy.

[–] Joelk111@lemmy.world 1 points 9 months ago

Do they not? I know I've had my debit card bounced before. Maybe it's just a thing with my bank. Only thing they'd do is transfer money from a savings account, charging you 15 dollars instead of nothing if you'd done it yourself.