Word: overdrafts
(lookup in dictionary)
(lookup stats)
Dates: during 2000-2009
Sort By: most recent first
(reverse)
...banks were less enthusiastic about changing the rules. In a year when the economy was slumping and consumer spending was way down, overdraft fees had become more profitable than traditional banking for half of America’s banks. After losing more than $300 million in the third quarter last year, Visa made a big push for its Visa check cards—basically just glorified debit cards—and recently announced netting more than $500 million this quarter...
Following months of criticism from consumer advocacy groups, the Federal Reserve, which is the body in charge of regulating this sort of activity, finally got its act together and issued a new set of rules last Thursday restricting overdraft services to come into effect July 1. In case you missed the announcement, the new rules require banks to obtain the express approval of cardholders before signing them up for overdraft protection and to explain the policies in easy-to-understand language...
...regulation ends there. Recurring payments, like utility bills, or anything you pay for with a check will still be subject to overdraft fees. Think about all the other beneficial changes that could have been made. Overdraft protection is extremely helpful for some people (myself not included), but the new rules leave you to choose between getting ripped off and not having any protection at all. Suppose, as one bill floating around Washington proposes, that, rather than a $35 flat fee, overdraft charges were proportional to the size of the overdraft—or that you were permitted a limited number...
Admittedly, I would rather have these rules than no rules, but the episode is a good reminder of how difficult it can be to pass effective financial regulation, even for something as minor and clearly exploitative as overdraft protection services. It doesn’t make you optimistic about ever setting good rules on credit cards, whose effect on our society is far more pernicious. Credit-card regulation passed last spring was a good start but ultimately does little more than limit banks’ ability to market credit cards to students and require them to warn you before they...
...consequences, even if the shape those consequences might take is never entirely clear. That’s one theory. Another line of reasoning: Much of what governs people’s behavior when it comes to credit and debit cards are poorly designed rules, which allow things like overdraft services to systematically take advantage of people’s laziness or bad habits. Either way, the outcome is predatory. There is no other word to explain the fact that Americans carry an average of eight credit cards and as much as $10,000 in unpaid balances and that...