America’s 3 Big Banks Made an Incredible $6.4 Billion in Overdraft Fees in 2017 – Why is no one Crying Foul About This?
Have bank overdraft fees gotten out of hand? JP Morgan Chase, Wells Fargo, and Bank of America certainly don’t think so as they made a whopping $6.4 billion in overdraft fees in fiscal 2017.
How many overdraft items does it take to come up with a figure in the multi-billion dollar range? That’s over 183 million overdraft charges to be exact at the standard rate of $35 per overdraft. What makes things even worse is that many of the items these overdraft fees were attached to probably were less than the overdraft fee in many cases. Not to mention that any subsequent checks or other items would incur additional overdraft fees too.
That is usury and equivalent to being charged for the same crime twice which is against the law. So how can these big banks get away with charging these fees? No one really knows but what we do know is these big banks are collecting outrageous fees on many people that are already strapped for money.
Can Big Banks Really Justify Their Fees?
It’s no secret that banks have no problem charging their patrons outrageous fees to have access to their own money. It also seems that the bigger the bank, the more fees they like to charge their customers.
Banks have gotten so bad at making lending decisions they no longer make much money off it. And while the default rate is nowhere near the 2008-crisis level for consumer loans, delinquency is increasing in recent quarters according to a recent study made by American Banker. Additionally, in 2017, commercial and industrial loans growth increased at the weakest pace seen in the past 6 years – to just over $58 billion a year. So now banks have turned to such things as overdraft fees, ATM fees, replacement debit and credit card fees and more to help them keep turning gigantic profits year after year. When you add insufficient fund fees, overdraft fees, early withdrawal penalties and bank teller fees into the mix, it adds up to an astonishing amount of money each year.
At the same time, these big banks are giving you next to no interest on the money you have deposited in them and they are free to make even more profits as they lend it to someone else. With a trend like this you may just see more and more people start stashing money at home again. After all, what different does it make if the money is stolen from home or stolen by their bank.
Banks will defend charging these fees by saying they have expenses associated with such things as returned checks and they are needed to help overcome operating costs. Apparently, big banks in America are covering their operating costs pretty well as they raked in a record $171.3 billion in profits in fiscal 2017. It makes charging these fees seem more like a price gouging scam than a tradeoff for the expenses big banks need to offset.
You can do Your Part to Stop Predatory Practices by Big Banks
Complaints about these bank fees have fallen on deaf ears with the current administration. However, midterm elections present an opportunity to change things. If Democrats win the Senate than that puts Sen. Bernie Sanders in charge of the Senate budget committee. Yes, the same Senator Sanders that ran for president in 2016 with a promise to break up the big banks.
In all reality, even with a change in thinking in the Senate reforming big banks will be a daunting task, that takes many years. That is why you need to find a way to protect yourself against predatory lending practices in the meantime.
What’s a good way to do this? Keep your money in a smaller bank or credit union that values you as a customer and individual. Credit unions also charge more reasonable fees and even offer such things like lower interest rates on loans. They often pay the most interest on savings accounts too. With a debit card issued by most credit unions, you can even choose whether they are allowed to go into an overdraft status or not. You should also check out banks that propose free online checking accounts with no deposit.
Small banks will generally do such things like refunding an overdraft fee as a single time courtesy and may even work with you on other banking fees that you have been charged.
So beware of keeping your money in big impersonal financial institutions that like to show their shareholders how much money they are making off you. Try putting your money in a smaller bank or credit union to reduce fees and get more personalized banking service.
Last but not least, a lot of overdraft apps have popped up this past year. The blog https://overdraftapps.com review these apps which connect to your existing bank account and are able to provide you (in most cases) interest-free cash advances.
We hope you enjoyed the promoted piece as much as we did!