Saturday, November 1, 2014

Life's Little Injustices (Take II): I Feel An Overdraft In Here

A funny thing happened to my bank account last week. Late one night, I decided to check my account online, only to find myself staring down a big, ugly, negative number. How'd this happen? I wondered.

Only yesterday, I'd deposited $100 to cover another bill hovering around the corner.  What happened?  I thought I was covered! I quickly found my answer...somebody had cashed a couple checks that I'd written three and four months ago, yielding a black hole in my account.

I did what any rational person does in this type of situation...I narrowly missed doing a limbo dance off the ceiling!  After all, in this economy, most people don't wait that long to cash their checks...because they literally can't afford the luxury (like my hairstylist, who cashed a check of mine within two hours after doing her work).

Anyhow, I popped by the drive-through and made a deposit to erase the deficit, and pleaded my case to the manager that afternoon.  "Surely you can't expect me to anticipate somebody sitting on a check that long..." I contended.  "I assumed those checks were long lost, or long cashed. Either way, I had no reason to question them."

Not quite, the manager responded: most jurisdictions impose a six-month limit for cashing checks, so the bank had to honor them. The overdraft protection policy was crafted to spare the embarrassment of bouncing a check or two.  At $32 a pop, I could afford it, right?

Fortunately, we struck a compromise. The manager lifted one overdraft charge, because I'd never asked for a reversal before, and the situation was a little unusual. By Friday, I closed the gap after transferring $25 from another source, and selling a stack of albums for $35 at my local music shop.

Normally, the shop only pays a dollar apiece on used vinyl, but the owner gave me $2 each, because he liked my selections so much -- including my second copy of The my Faces stack (Long Player, First Step, A Nod's As Good As A Wink To A Blind Horse, Ooh-La-La) some imd-'80s Lou Reed fare (Legendary Hearts, New Sensations)...and my early XTC collection. Ouch!

Of course, we know why banks charge these types of fees. They're pure gravy, as a June 2013 white paper from the Consumer Financial Protection Bureau suggests.  According to the report -- which comes from survey data reported by larger institutions -- overdraft and non-sufficient funds fees accounted for 61 percent of the charges that banks got in 2011.

Based on those figures, the bureau estimates that banks netted about $12.6 billion from consumers in 2011. That same year, the average consumer paid $225 in overdraft charges, and roughly 27 percent of all checking accounts paid at least one overdraft fee. If you felt stung, you've got plenty of company.

You can read the full report below, or skim the New York Times story if you're pressed for time. Suffice to say, more discussion needs to occur, Thankfully for me, good musical taste still pays off when you're struggling, as another vinyl proprietor told me earlier this month: "I still get people saying, 'Why can't you pay three bucks a pop for my Journey albums?'" 

The CFPB report's figures also convince me of something else...if John Dillinger had owned the banks that he robbed...he might have been a hell of a lot better off.  As for those copies of Legendary Hearts, or Ooh-La-La?  I'll just have to replace them later, I suppose. Such is life. --The Reckoner

Links To Go (C'mon, You Know The Drill Already): (Lots of good info here):
Bank Fees Are Hard to Avoid, Especially For Low-Income Customers:

Consumer Financial Protection Bureau
CFPB Study Of Overdraft Programs:

The New York Times:
Banks Rake In Overdraft Fees, Report Finds:

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