The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest move by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.

The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.

The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.

Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.

  • barsoap@lemm.ee
    1·
    10 months ago

    It really depends on what you negotiate with your bank, at least in Germany, though it always takes the same form: Either the withdrawal gets instantly bounced, or you negotiated an automatic credit. On average about 12% interest, definitely limited to 1000 or thereabouts or whatever lower sum you negotiated and the bank allows (depending on your regular income), if you’re poor and they’re a public or cooperative bank they probably just won’t give you one, or cancel it if you’re constantly in the negative, or limit it to something like 50 bucks, “buy food for the end of the month” type of territory. (And if you’re banking with a private bank that’s your own damn bloody fault they make a business out of fucking over their customers).

    And while those 12% sound high if used as intended – need to pay something but your wage check is still five days away or so – then the interest is negligible. It’s not a substitute for an actual credit which are way cheaper and any honourable bank will tell you to refinance if your account is constantly in the red. You after all pay them to manage your money, not steal it.

    Oh: When bouncing certain kind of transactions (all modern online ones) the transaction will just fail, you’ll see it right there on the POS terminal. With older offline stuff the bank will refuse and bill whoever wanted to withdraw from your account some small amount, you’ll then have to deal with that later as they’re bound to add it to the bill you have to pay. Long story short if you’re short on money don’t have your utility bill on automatic withdrawal, transfer the money manually they won’t break your knees for delaying it a couple of days.