Wow, Bank of America is getting rid of its overdraft fees on debit cards. This is how little I trust commercial banks: I’m sure there’s a rub. I’m sure they’ve found a secret, special way to screw customers that live paycheck to paycheck, and this is all just a P.R. campaign to obscure that. But maybe not. Maybe this is how they’re going to be competitive. Instead of overdrafting your account when you use your debit card and don’t have money, the plan is to have your card denied, which the vast majority of people would prefer, I’m sure. If this is what it purports to be, then it’s such great news. Overdraft fees are a pernicious form of usury, a real human rights abuse. G.D. explains:
In practice, though, many banks enroll their customers in the programs without telling them and assess charges to customers’ accounts out of sequence in order to force them into overdrafting their account…..
But the proliferation of banks in poor neighborhoods has done little to keep the unbanked from opting for “fringe banking services” — check cashing services, payday lenders, and the like. Those institutions charge onerous fees of their own, but unlike the big banks, their fees are explicitly outlined. Customers may cough up $12 for the privilege of cashing a $300 check, but it makes more economic sense than being stuck with miscellaneous surcharges over the course of several weeks for not maintaining a minimum balance, withdrawing money from an ATM, writing a check, or overdrafting your account — penalties that can accrue much more easily and be much more disastrous when your life is inherently unstable.
However predatory and exploitative you may think the banks are towards the working poor, I promise you that they are much worse than you can imagine. How do I know? Well, I used to work at a bank. For the first couple of years I worked at a bank, I had a fairly laid-back, easy existence. I had a good life working at a branch that served downtown Austin, and I worked mainly with business customers, the people from the bars and restaurants that came in and out all the time because they were moving a lot of cash. But then I got promoted to manager and moved to a smaller branch in a wealthy neighborhood. That didn’t worry me overmuch, though. Working with wealthy customers can be a headache, since they’re so entitled, but at least your customers are making money off the bank and are by and large happy about that.
What I didn’t realize when I signed up for the job was that I was also inheriting a mini-branch in the mall. And even though that branch was small and not even really full service, it immediately became the source of 90% of my headaches. What’s not fun in commercial banking is having paycheck-cashing being a huge part of your foot traffic. How it works is this: banks don’t cash checks for non-customers, unless the check is drawn on that bank. Then they have to. A lot of people who don’t have bank accounts would far prefer to get their checks cashed at the banks, where the fees are usually a lot smaller than those horrible check cashing places. But the bank management hates these folks, because they don’t make any real money off them, besides the relatively small $3-$5 check cashing fees. So they make it hellish to cash your paycheck at a bank. The ostensible reason is “security”, but it doesn’t take even the dimmest teller but a week to figure out how little sense that makes. (Checks drawn off other banks are riskier to cash, because they aren’t funds verified. The losses from fraudulent checks aren’t nothing, but are better and more efficiently handled by training tellers to spot frauds instead of putting the customers through some of the security theater they subject them to.) They had to present one or two forms of ID and put a thumbprint on the check, and since everyone tends to cash their checks when they get them, this level of ID requirements plus the crowds makes the lines unbelievably long. The people who suffer the most are the poor tellers, cashing one check after another for people who are crabby because they’ve been working all day and this long ass line is the only thing between them and having their cash.