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Comment by the_snooze | Hacker News Reader

https://www.fdic.gov/consumers/overdraft/

Overdrafts have been opt-in by regulation since 2010. What banks have done is try to trick people into opting into "overdraft protection," which is really just the old system that allows a customer's checking balance to drop below 0: https://www.wellsfargo.com/credit-cards/features/overdraft-p... As long as a customer takes no action or just says "no," they won't be allowed overdraw their checking balance.

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Yes, but if you do not opt into overdraft, you will still be charged a “non-sufficient funds” (NSF) fee when the bank declines your transaction. And the NSF fee is usually higher than the overdraft fee.

This doesn't make any sense and is just a money grab on the poor and desperate, because there is absolutely no technical reason why declining a checking or debit card transaction should cost $35+ to process.

Depends on the bank, I would imagine. Anecdotally, I've never been charged a fee for having a transaction declined because of insufficient funds, nor has my wife, and collectively that's ~5 different banks.

Based on my personal experience, all the big banks in Canada do it. The fee is 45-48 CAD for each declined transaction, no matter the amount.

Back in the day (when we had to go to school uphill both ways), I met a banker who told me, "whatever your bank is charging you for a bounced check, it isn't nearly enough". Then he described how the system worked: the actual physical check had to be sent back from your bank, to the Federal Reserve branch of the receiving bank, then to your branch of the Federal Reserve bank, and then to your bank. Not electronically: I'm describing the movement of the actual physical paper check. So, there was a real cost to everyone for a bounced check and of course the person who wrote the bad check should pay. That makes sense.

Of course, this makes no sense in a world of electronic transfers via ACH. The banks that are still charging $35 for a bounced transfer are engaging in something barely more legal than theft.

Let alone the cost changes for a bounce, a decline is very different from a bounce.

But also that bounced check was in a big stack and probably got 3 minutes of employee time spent on it across all those institutions combined. I bet that banker was describing some exceptionally double-dipped charges if they thought it wasn't high enough.

Super interesting to learn this. I find that people often assume the things that don't make sense in today's world simply never made sense but often that's not the case! You're right, overdraft fees DO make sense in the world of physical checks the system just hasn't caught up (intentionally or not). Thanks for sharing!

So how do you opt-out? Or is this an action you have to take when creating the account.

You opt-out or opt-in when you set up the account or anytime afterwards. I know only because I just setup checking for my teenage son and it was something the agent asked during the process. I pushed back and declined even though they gave me the end of the world spiel.

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