Legal Banking Scam

Discussion in 'Et Cetera, Et Cetera' started by Mem, Dec 19, 2010.

  1. Mem

    Mem
    Gold Member

    Joined:
    Jul 4, 2006
    Messages:
    8,087
    Likes Received:
    8
    Gender:
    Male
    Location:
    FL
    A lot of banks are now offering overdraft protection on debit cards. They offer it free and encourage it. If your account ever goes below zero they will allow and authorize any bebit card transaction to go through if you accept this.
    `
    The problem is that they will charge you $34 (Chase amount) per the service. They will only charge you 3 times that day ($102) if you keep using your card. How nice of them.:rolleyes: Then if you don't have the money back in your account (plus fees I'm guessing) in 5 days they will charge you $15 extra, and again the same amount every $5 days. So that $5 purchase at the 7/11 may cost you at least an extra $34.

    If it's offered at your bank you should decline it. If you decline it all that will happen is that your debit purchase will be declined if there is no money in your account. How the government allows this type of scam that I consider theft is bizarre to me. Banks are pushing this too, I've had it done in person. They tell you it's a free service and no cost if you don't use it. Unsuspecting people think it's a good thing because they don't know better.
     
  2. Rikter8

    Gold Member

    Joined:
    Jun 30, 2005
    Messages:
    4,488
    Albums:
    3
    Likes Received:
    51
    Gender:
    Male
    Location:
    MI
    Yep, Bank of America is like that too.

    I dumped them like a hotcake.
     
  3. RalDudeHangin

    RalDudeHangin Member

    Joined:
    Nov 29, 2009
    Messages:
    373
    Likes Received:
    16
    Gender:
    Male
    Location:
    RTP, NC
    I def would just rather have the purchase declined. This is another reason why I've dealt almost exclusively with credit unions over the years. I have free overdraft protection. They'll cover the overdraw. I have 30 days to pay it back or they do start charging interest on it and consdier it a laon at that point. So maybe it's "99%" free ;) .. but they're approach is much better than the typical bank...
     
  4. D_Sue Ellen Brastretcher

    D_Sue Ellen Brastretcher Account Disabled

    Joined:
    Jan 8, 2008
    Messages:
    1,201
    Likes Received:
    1
    Ehh, I just don't use debit cards.
     
  5. Rikter8

    Gold Member

    Joined:
    Jun 30, 2005
    Messages:
    4,488
    Albums:
    3
    Likes Received:
    51
    Gender:
    Male
    Location:
    MI
    It's not just debit.

    It's ATM, checks, eletronic drafts etc.
     
  6. B_stanmarsh14

    B_stanmarsh14 New Member

    Joined:
    May 24, 2007
    Messages:
    2,266
    Likes Received:
    6
    Gender:
    Male
    Location:
    Nottingham, England
    Basicaly sounds like the unauthorised overdraft fee charges that are common in the UK, in how they work.

    Lloyds TSB have now introduced a new maintance charge to have an overdraft on your account, which is £5 per month, even if you do not use it.
     
  7. D_Sue Ellen Brastretcher

    D_Sue Ellen Brastretcher Account Disabled

    Joined:
    Jan 8, 2008
    Messages:
    1,201
    Likes Received:
    1
    Oh, okay. Can you tell I am a Visa or Discover girl? Every time I go somewhere I charge it on my credit card and then I earn Cashback and rewards. I won't have an ATM or a credit card if they want to charge an annual fee. The same goes for checking and savings accounts.
     
  8. hctib1

    hctib1 Well-Known Member

    Joined:
    Dec 7, 2008
    Messages:
    191
    Albums:
    2
    Likes Received:
    678
    Gender:
    Female

    I agree....my bank charges $34 every time someone overdraws their account whether or not they have overdraft protection. So what's the use in having it? I belonged to a Credit Union some time ago that would automatically take $100 at a time out of your savings account and place it in your checking account to cover overdrafts at no charge as many times as needed.....now THAT was nice as long as you had it in your savings to use. If you didn't have $100 or more in savings, well you paid the $29 or whatever for each transaction after the overdraw
     
  9. B_Marius567

    B_Marius567 New Member

    Joined:
    May 30, 2004
    Messages:
    1,952
    Likes Received:
    5
    Gender:
    Male
    obama pasted a bill that you have to sign up for overdraft protection on a debt card. so maybe the bank got you to sign up for overdraft protection.

    I use ing direct and they have no overdraft protection just have to pay 7% interest a month when you go over.
     
    #9 B_Marius567, Dec 19, 2010
    Last edited: Dec 19, 2010
  10. Mem

    Mem
    Gold Member

    Joined:
    Jul 4, 2006
    Messages:
    8,087
    Likes Received:
    8
    Gender:
    Male
    Location:
    FL
    I've never seen an ATM card with an annual free. I've never had a credit card with an annual free. Some checking and saving accounts won't charge a fee if you have either direct deposit or keep a certain amount in your account, sometimes as low as $100. It's up to you to avoid fees and keep your checking account free.

    I just signed up for a Chase checking account. They will deposit $100 into my account and all I have to do is either have direct deposit or do 5 debit card transactions (no minimum amount, I can spend $3 if I want) per month. After 6 months I can close the account, if I close it before then I have to pay back the $100. No minimum amount per month in the account is required. I think they want to catch dummies who opt for overdraft protection to charge them $34 a pop. I've never had a bounced check and I will not let that account get close to a zero balance.
     
  11. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Obama passed a bill that said banks cannot charge overdraft fees for debit card purchases that exceed account balances. So if you go to make a purchase and don't have the money, your card is declined. This doesn't apply to automatic payments though. So what Mem's bank is doing is illegal unless you opt in....I would suggest reporting them as they are trying to find a way around the law. Before the law went into effect my bank called my about a dozen times asking me if I wanted to 'opt in' to a plan that would allow my debit card purchases to go into the negative. They tried to make it sound like it was a good thing to have this service, but what they were really trying to do is get me to allow them to charge overdraft fees.

    In response to this law, in an effort to make up for lost revenue, banks are now getting rid of free checking and putting minimum balance requirements on checking accounts. If you go below the minimum balance requirement, you are then charged a fee. My bank just started charging $8 if I go under $100. Here's the kicker. In order to get a car loan, I had to agree to have my payments automatically withdrawn from my account on a given day...it wasn't an option not to. So basically if I only have $120 in this checking account, and on the 15th $115 is automatically withdrawn for my car payment, I will then be charged $8 for my account going under $100, and then another $35 because my account was overdrawn due to their minimum balance requirement. Oh, and on top of this, now I can only write 2 checks a month without being charged another fee.

    Everyone needs to stay on top of their bank and their policies. Right now they are all scrambling to find ways to screw us out of our money. Perhaps they have forgotten we don't really need to keep our money in a bank?
     
  12. nudeyorker

    Gold Member

    Joined:
    Nov 6, 2006
    Messages:
    42,918
    Likes Received:
    36
    Gender:
    Male
    Location:
    NYC/Honolulu
    I have a fee on a Citi debit card but it's for an airline miles program. I've never done overdraft protection. I have a system that works pretty well for me; I keep track of how much money I have and if it gets low I transfer money from savings into checking.
     
  13. Mem

    Mem
    Gold Member

    Joined:
    Jul 4, 2006
    Messages:
    8,087
    Likes Received:
    8
    Gender:
    Male
    Location:
    FL
    I'm going to be taking a long trip and was going to use my debit card, but it might just be better to use my credit card and earn reward points and pay it when the bill comes.
     
  14. DaveyR

    DaveyR Retired Moderator
    Gold Member

    Joined:
    Jun 15, 2006
    Messages:
    11,908
    Likes Received:
    8
    Gender:
    Male
    Location:
    Northumberland
    You only pay the £5 monthly fee if you use the overdraft in the given month.
     
  15. Mem

    Mem
    Gold Member

    Joined:
    Jul 4, 2006
    Messages:
    8,087
    Likes Received:
    8
    Gender:
    Male
    Location:
    FL
    I think the law may be that you have to sign up for it, that they can't add it to your account atomically.
     
  16. B_Marius567

    B_Marius567 New Member

    Joined:
    May 30, 2004
    Messages:
    1,952
    Likes Received:
    5
    Gender:
    Male
    citi bank makes me pay 60.00 a year not using the there there credit card then they charged my card 79.00 every 3 years when they sent me a new card. so I never use there card.
     
  17. wispandex_bulge

    Joined:
    Sep 11, 2004
    Messages:
    387
    Albums:
    1
    Likes Received:
    1
    Gender:
    Male
    Location:
    Wisconsin
    Many bank's policies are scam-like, but with a little effort on your part, you can avoid the pitfalls and reap what few incentives and rewards they offer.

    Tips for those who may need to build or rebuild credit:

    Secured cards can eat you alive in fees; beware!
    Try taking a loan out of a bank instead, use a car if you have it as collateral. Keep the loan open for at least six months, and DONT spend the money. Just pay back the majority of the loan the first month, leaving enough balance that you can make 5 or 6 more "minimum" monthly payments without paying it off. If done correctly, you will spend a modicum of money ($5-20) and already be building a good credit history.

    Tips for those with good credit:

    Do some reasearch at sites like bankrate.com, creditcards.com, and regular search engines. Rewards credit cards reward programs differ greatly. So, consider how you would use the card before you apply. Doing searches online, I have found banks and credit unions offering 3-5% interest on checking accounts. This is a really good deal if you are able to maintain a decent cash balance. There are requirements that must be met which often include using your debit card 10-15 times per month, doing paperless statements, and having a direct deposit or bill payment. Also this generally only applies to the first 10-25k, but few people should be keeping more than that in liquid cash.

    My strategy is to use rewards credit cards (I really like my capitol one Venture because even though I might end up paying a $60 annual fee next year, it gives me 2 points for EVERY dollar I spend, regardless of what for) for large ticket items and travel (which I do for business). I use my debit card for small purchases like groceries and fast food. So I am able to get the high interest rate (my credit union is currently paying 2.75%) for my checking balance, and I get pretty good (2%) rewards out of my credit card purchases.
     
  18. Rikter8

    Gold Member

    Joined:
    Jun 30, 2005
    Messages:
    4,488
    Albums:
    3
    Likes Received:
    51
    Gender:
    Male
    Location:
    MI
    The biggest Disasterous Word here is BANK.

    Stop using a bank and go with a CREDIT UNION.

    Much lower fees, Free checking, free savings, no annual costs and their Visa cards have low interest rates.
    Plus... they will work WITH you, not AGAINST you like a bank!
     
  19. wispandex_bulge

    Joined:
    Sep 11, 2004
    Messages:
    387
    Albums:
    1
    Likes Received:
    1
    Gender:
    Male
    Location:
    Wisconsin
    Actually, I have no animosity toward banks. Its banking corporations that have lost their way.

    A bank's purpose is to connect people who have money that they are willing to lend to people who need to borrow money. The bank is a middle man. They should be able to make profit by charging those who borrow a slightly higher interest than those who deposit. I am perfectly ok with this business model, because it rewards those who are willing to lend their money, while competition to be a lender should keep borrowing rates down.

    Right now there are a couple of factors that are screwing everybody over. #1 is, of course, that the fed is lending money for practically nothing. (Can someone elaborate on this? I think the fed is lending money at less that 0.25%.) As long as banks can get cheap money, your deposits are chump change to them. #2 is that as long as the big bank's rates are low, smaller banks wont be able to do much better. And #3 is a doozy, because someone has to accept some responsibility for poor financial decision making. With so many high risk borrowers out there who desperately need cash, there is very little competition for lower lending rates.

    Also, the reason I dislike banking corporations is that they are beholden to shareholders, who are also "depositors". And although there is nothing well selling shares of equity, I think that sometimes, a bank makes bad decisions for its customers in order to bolster share value.
     
    #19 wispandex_bulge, Dec 19, 2010
    Last edited: Dec 19, 2010
  20. nudeyorker

    Gold Member

    Joined:
    Nov 6, 2006
    Messages:
    42,918
    Likes Received:
    36
    Gender:
    Male
    Location:
    NYC/Honolulu
    I don't mind paying the fee on airline mile debit and credit cards. I usually get a roundtrip ticket out of the deal on each one every year.
     
Draft saved Draft deleted