Bank Charges

Anyone who’s ever gone overdrawn will be eagerly awaiting the result of the test case which will decide whether the charges that banks levy on their customers are fair or unfair. The issue that’s making the news is to decide if the bank is making a charge that genuinely reflects how much it costs them (unlikely – surely only a small admin charge would be required), or if they’re making a charge to punish someone for going overdrawn. This distinction is important because the banks are not allowed to make punitive charges, only the government is legally able to do that.

I had one objection to this test case. If it goes ahead and banks aren’t able to make such charges anymore, then the banks will lose out and they’ll try to make their money elsewhere. This would mean the end for free banking as we know it, and banks might have to start charging us to keep our money, or alternatively raise interest rates on loans. This would be bad.

But then I looked at it another way. The people who are having to pay these bank charges at the moment are the people whose bank balances are closest to zero; in other words, the poorest. Now I can’t support a system which not only punishes people financially for being poor, but also depends on that money to finance the richer people in society who rarely have to pay charges for going overdrawn. It would be better that we all just paid a flat rate, or even better that banks charged more for accounts with more money in them.

The consequences of this test case could reach far and wide.

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3 Responses to Bank Charges

  1. DB says:

    My visit is via Atheist Revolution, but being a former banker, this topic caught my eye. I will attest to the fact that a $35 overcharge fee per overdraft (up to five in a day) is completely unfair and a horrible bank practice. The fees are automatic with very little admin oversight. The banks have their ways of ripping people off, but this one takes the cake. Five overdraft fees in one day will ring up to $175 for a bad day. Which is often someone who simply made a mistake on which day their payroll went into the account. I never turned a customer away who had an honest reason for being overdrawn and I would reverse on average hundreds of dollars in fees a day. Which isn’t too hard to do at $35 a pop. And no one overdraws just once either. I have so many thoughts that banks could levy fees for overdrawing, but not destroying the lives of customers at the same time. So sad. Sorry this went long, but I have seen the inside and have passion enough to fight it!

  2. DB says:

    btw, that only scratches the surface of overdraft fees. How they are levied is even worse. Another time I suppose lol.

  3. grammarking says:

    Indeed. I know a guy who owned a sweet shop. One day, after an order had come in but before he’d done his week’s banking, his business account balance was low, around £7. The bank, seeing this, automatically sent him a letter informing him of it, charging him £10 for the pleasure. This put him overdrawn by £3 and he got charged for it!

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