U.S. banks to make $38 billion from overdraft fees: report

[D-Mack]

U.S. banks to make $38 billion from overdraft fees: report
Mon Aug 10, 2009 3:43am EDT


(Reuters) - Banks in the United States are poised to make $38.5 billion in customer overdraft fees this year, the Financial Times said, citing research by Moebs Services.

A large portion of the revenue is likely to come from the most financially stretched consumers, according to the paper.

It said the research showed that many banks have increased charges on overdrafts and credit cards in order to boost profits.

The median bank overdraft fee rose this year by one dollar to $26, the paper said, citing the Moebs data.

.-.

http://www.reuters.com/article/newsO...5790YM20090810

Not bad, is this across the board or just by the big institutions?

[Slimprofits]

Re: U.S. banks to make $38 billion from overdraft fees: report

http://www.moebs.com/FeeFinderServic...6/Default.aspx

Moebs $ervices executed a statistical survey designed by Professor George Easton of Emory University for 2,014 banks, savings institutions and credit unions in the United States between June 12th and June 22nd, 2009....

cont.

[jmdpet]

Re: U.S. banks to make $38 billion from overdraft fees: report

What's worse is that banks appear to use dirty methods to maximize overdraft fees. For example, transaction sorting:

http://a.abcnews.com/m/screen?id=8033242&pid=574

Texas real estate agent Jory Walker, 25, discovered one of the new computer tactics that many banks now use. Called "transaction sorting," it means banks can clear charges in any order they choose.

"I definitely thought they were taking advantage of the situation," Walker said.

In his case, a single $100 overdraft led to multiple fees because, he says, a bank computer program cleared an $850 check ahead of several smaller charges that had occurred earlier. In short, the bank took things out of sequence.

"When I questioned them on that over the phone they said they had the right to clear whatever they choose to at whatever time in whatever order," he said. "So instead of over-drafting once, it turned out that we overdrafted almost six times. That resulted in almost $30 per hit, for items as small as a $1.50 purchase."

This resulted in about $200 in fees. The banking industry defends transaction sorting -- now standard practice at many banks -- as reflecting the preferences of most consumers.

I smell a class action lawsuit.

[Slimprofits]

Re: U.S. banks to make $38 billion from overdraft fees: report

It's hard to get worked up about transaction sorting.

I see it as a natural response to the various tricks that banking customers have played over the years using ATM deposits and what not.

There are truly unfair practices and there is tit-for-tat and this is the next step in the latter.