Wells Fargo became the latest bank to announce a shift in its policy towards overdraft fees on Wednesday, saying it would allow consumers to “opt out” of a programme that hits them with charges of more than $30 when they go overdrawn on their accounts …

There is one significant difference in the plans: Chase will automatically remove all its customers from the overdraft service, and allow customers who want that protection to opt in. BofA and Wells Fargo will leave it to customers to opt out of the controversial overdraft service.

overdraft is not an account holder’s right. it’s a privilege granted by the bank that assumes the risk that you will overdraw your account and actually never pay it back. why can’t banks just tell their clients that, plain and simple, instead of indulging an entitlement attitude?

link: “Wells Fargo changes its overdraft policy”, The Financial Times.

(via thedirtycanuck)

I dunno, ‘nuck: I don’t know of anyone who thinks of overdraft “protection” as a right. When my bank has the privilege of essentially manipulating time in order to make make it appear that i overdrew ten times instead of once, and claims it as their right to do so, it seems to me that it’s really not me but the bank that is exercising undue entitlement, whether or not it’s their legal prerogative. Chase is (sorta) changing this now, thank goodness, but not without having already made a serious killing on it. When Wamu allowed my bank account number to get stolen a few years back, it took almost a month’s worth of negotiations to get the overdraft fees reversed even after my money was returned, which effectively kept my account in the red the entire time. It forced me to spend time turning off automatic billing, and forced me to pay late fees on those bills that would have been paid if not for the overdraft policy.

IMO, calling overdraft a right rather than a privilege isn’t just the banks’ refusal to put things straightforwardly; it also covers up the fact that as an account holder, one takes on a certain degree of unquantifiable risk for the bank as well: the risk that your bank might screw you over and make you pay—in time and/or money—for their screwups.

Even worse, the bank gets incentives for either screwing up or screwing you over with excessive overdraft penalties because it’s hard and often embarrassing to challenge them. I know plenty of people who have had to just give up. Some have switched banks, and other have decided the hassle just wasn’t worth it.

If you’re poor—and let’s face it, most of the people who are overdrawing probably are—you likely feel entitled to very little. When I overdraw, I tend to feel ashamed. All my bank is really telling me in this case is that I have the right to choose between of feeling ashamed and angry at myself when I overdraw, or feeling embarrassed when my debit card is denied. In either case, the overriding factor is not what I feel but the fact that I’m broke. When the bank calls overdraft penalties a “service,” it appears as if they are providing account holders with some sort of program for which they charge.

If they were to call it, let’s say, “penalties,” it would at least tell what they are doing more honestly: punishing account holders for being broke. It’s not the bank’s fault that I’m broke, of course, but they have certainly found a lot of ways to profit off of that fact, all of which, in effect, make me even more so. Call me irresponsible for overdrawing, fine. But when I screw up and overcharge on my debit card, the bank wins. When the bank is irresponsible, manipulative, and/or otherwise screws up, the bank still wins.