Should Overdraft Protection Be Eliminated?

[erpowers]

Currently, there is an opt-in requirement for overdraft protection; however, should there be a complete elimination of overdraft protection? Aside from embarrassment, what would be the worse thing that would happen if there was no overdraft protection?

My reason for starting this post is that in 2009 banks collected between $38.5-40 billion in overdraft fees. I may be wrong, but I imagine that money could have been put to better use if it had been saved or spent on things other than overdraft fees.

[IndyJones]

1. My overdraft protection costs me zero. If I were to ever go negative, money transfers from my

savings account into my checking account...for free...a benefit of working with a credit union.

[prairierose]

6. Indy, this is one of the reasons I love my CU so much.....

since I joined, I have never had to worry about overdrafts or overdraft charges. I feel sorry for those people who are still in the clutches of the banksters.

[cthulu2016]

2. re: "collected between $38.5-40 billion in overdraft fees"

Is that only fees for over-drafts on overdraft protected accounts, or all overdraft fees?

[hlthe2b]

3. No way.

[sinkingfeeling]

4. I love my free overdraft protection. Why would I want to 'bounce' a check and pay a

fee of $32?

[bemildred]

5. Use a credit union. nt

[Posteritatis]

7. Eliminated? Try mandatory. (nt)

[HappyMe]

8. No.

The only time a fee is applied (for our account) is when there are not sufficient funds in savings to cover.

[1monster]

9. Banks will just change the name to NSF fee. They charged those before they ever

offered overdraft protection.

[The Magistrate]

10. A Couple Of Reforms Seem Indicated, Sir

They could be readily handled by modern computers.

First, any fee should be expressly stated as a rate of interest on a short-term loan, which is what an overdraft fee actually is. As it stands now, an overdraft of two dollars and one of two hundred result in an identical charge, which in the smaller instance is always exorbitant.

Second, banks should be required to honor charges on an account in an order that allows the greatest proportion of them to clear. As matters stand now, it is not uncommon for a bank to charge up the largest item first, thus ensuring several smaller ones will be overdrafts, and generate hefty fees for the bank.

[cbayer]

11. Wasn't 2009 prior to the new rules concerning opt-in?

The banks were gaming the system previously by allowing people to overdraft, not informing them and putting the lowest charges first so they could collect more fees per incident.

This happened to me and I had $300 on about $100 of purchases before I knew it.

So, I would say that if they have changed these practices and people choose to opt in, there is no reason to eliminate it.

[FirstLight]

12. your question assumes

that some of us have SAVINGS or CREDIT and can even GET overdraft protection...those fees collected are more punishment of the poor who maybe play it too close to the vest and can barely keep a account open. I used to start almost every month in the hole because if ONE thing hit and the amount was off...the overdraft fees would then cause my whole account to go into the red and every payment after that would just add to the domino effect. I closed my account in Nov last year, all I have is what's in my wallet...and that ain't much