A lot of this is specific to the US. For example UK bank accounts are nearly all free, no matter how much money is in them. 99% of cash machines don't charge for withdrawal no matter which bank you are with.
German banks (as a counter-example) just won't let the transfer go through. British banks charge you 25 quid.
Weren't British banks even recently ordered by their regulator to be less evil with their fees?
Large charges on people who inadvertently went overdrawn by less than £10 for less than a day have been a problem for many people in the UK.
HSBC changed from a £25 fee each time the account went informally overdrawn to a £5 per day each time the account went overdrawn.
http://www.telegraph.co.uk/finance/personalfinance/bank-acco...
Submitted article is talking about poor people. Budgeting is tough for poor people, and penalising those poor people because they are in tiny amount of debt for less than 48 hours feels unfair.
(They had some really crappy excuse for that, too.)
Depends how you run your finances.
Isn't that exactly the point of the article?
(Also, didn't they used to be called unarranged overdrafts? Did the name change to get around some kind of rule?)
HSBC is now sending you an SMS and give you until the end of the day to transfer some money before you need to pay the fee. (note that unlike a few years back, money transfer seem to happen in a few hours, so that is actually possible) Not sure about Santander, I haven't been in the situation while banking with them.
I didn't see any option to disable it in either bank.
My bank specifically charges £10 per month for informal overdrafts, with fees capped at £60 per quarter.
Still not free, but substantially better than the £25 you claim.
http://www.smile.co.uk/assets/pdf/smile/currentaccounts/smil...
(And I wouldn't trust myself to pay my rent, gas, electricity, water, internet etc on time every month if I had to do it manually. Why not automate?)
I've been in plenty of situations where a $29 overdraft fee compared favourably to a $150 late fee.
But then you typically pay a fee to whoever unsuccessfully tried to debit you, since they have to do it again.
(Paying with debit cards usually checks and decline if you don't have enough money in your account. But yes, a declined direct debit might lead to a fee from the party trying to debit you.)
Which is great, except they make a load of their money from hefty overdraft charges (per the article), which means the poor cross-subsidising the rich.
Frankly, this is explicit government policy.
Hell, QE is so ridiculous. What it effectively does is that it gives government more control over the economy. The QE money guarantees the government money that "it has to pay back" but doesn't pay interest on. In other words, the government believes (and may be right) that this money never needs to be paid back, and this is what's subsidizing government spending at the moment. Effectively a tax on the monetary base instead of on other things like assets (tax the people who only have money to the benefit of those who own houses, stocks, bonds, ... that sort of thing. And this is done without explicitly charging them anything).
Currently, every European is paying 120 euros monthly to subsidize banks and stock/bond prices. They are going to keep doing this "for 2 years" (after that, the theory is, governments are going to be offered more free money and say "no thank you, I've had enough". In other words, fat chance). By that time every European will have paid 3000 euros to push up stock prices, the vast majority does so without owning stock, so it's just a cost for them.
(The US poor have paid 8333 per-person over the last 4 years to create the current bubble in stocks, house prices, bonds and so on. Currently they're not paying anymore. Note that the stock market is doing very badly. Expect the housing market to crash shortly)
Now you might think that you haven't lost any money, and that's true, you've lost value. Those 8333 you paid over the last 4 years mostly went to funds with the purpose of making houses more expensive. Making stocks more expensive, and the like. So you haven't lost money ... well no, you haven't. You've lost part of the ability to buy houses, stocks, cars, bread, ... But don't worry ! The official statistics show no loss of purchasing power (they did take out gasoline, cars, houses, ... you see when those things got expensive, a lot of people stopped buying them. So "it doesn't make sense to have them in the consumption index anymore". Great, and might even be accurate, but let's not pretend this remains a useful metric to compare the wealth of the average American to 20 or even 10 years ago).
And this is explicit government policy. It's not like the ministers and so on don't know this. The net effect is to let the government control slightly over 50% of economic activity, which wouldn't be sustainable otherwise. So they make sure the extra taxes are well-hidden.
(Over here, Finland, overdrafting is not really possible; you need to make a loan agreement to be allowed a negative bank balance, and that is not offered if the credit rating is not clean. Is that better or worse for poor customers?)
Why is that obvious?
The simple fact is, these days, there isn't any follow up. No one is 'followed up closely' in some expensive human-driven procedure. It's all automated. The cost of someone going overdrawn by £10 is pennies.
It can't be expensive because most banks will give you a free overdraft if you ask. Sometimes even if you don't ask. I've had a £1500 overdraft facility on my bank since I opened a student account 18 years ago. Back then I used it a lot without any fees. Now I don't use it at all but it's still there. If that overdraft cost anything I wouldn't have it. The only time you get charged is if you haven't planned and set things up ahead of time. I don't believe for a second that updating a signed int in a database record saves the bank £25 per infringement, yet that's what they charge.
Overdraft fees like that are evil as they are very much a profit center on the poor. The Finish system of just not allowing the transaction is much much better.
This is a failure of the market though. People want free, so the banks have to provide free. But they also have to make money, so they only option is dirty tricks. A lot like games that pressure you into buying powerups
Unemployed people can get what's called a "basic bank account". They need this for their benefit to be paid into. They need to prove their identity, but that can be done with driving licences or passports or utility bills or tenancy agreements.
The requirements for your particular account - which is not a basic account - are not generalisable across all accounts.
I agree that UK banks are aggressive at charging fees, often to people who can't afford them. And that the opening times suck. And that the telephone staff can be rude and unhelpful.
Utter rot. In fear of being legally compelled to, many UK banks offer a very basic bank account that they typically don't advertise or offer.
http://www.moneysavingexpert.com/banking/basic-bank-accounts
France used to be famous for that. When I was a kid (before internet to check you account), there were TV programmes about people having to pay tens of thousands of French Francs because they forgot about an account and the account charge put them a few francs in negative balance and it snowballed quickly over a few years. Not quite sure how it is today in France.
> You need a letter from your employer so you can't open an account if you're unemployed. Even with that, you have to wait a couple of weeks for an appointment to talk to somebody before they open your account.
I had to go through that to open an account in Luxembourg. Never could open an account in Spain for that reason but you don't really need one if you have an EUR account somewhere else in the EU. Spain has a wonderful collection of massive charges on everything you would think is free like getting money out of the cash machine, transferring money electronically or even receiving money electronically.
At least in the UK, you can get a free account. Used to be not so easy in Belgium (Postoffice offered a limited free banking, so that was the excuse for all the other banks for charging) and they also had their own set of shenanigans.
I have noticed things getting better with internet banking. However, some things have gotten much worse. Loan and Mortgage are no longer underwritten by the bank itself, so it does not matter if you know your banker and have been banking 20 years with the same bank - you will need to go through the exact same process as a guy from the street - worse, instead of just using your credit score as other bank would, they will use those 20 years history to give you a worse rate if they can.
It depends on the bank, but the the three I use doesn't charge for anything you pointed