The practice of a minority of people who continually trigger overdraft fees could result in bank customers across America having to pay for currently free services like checking accounts.
While some in the media have been making a big deal about people being socked with overdraft fees, as usual, it’s not as simple as that, as the vast majority of people using banks never use an overdraft unless they choose to. The people being focused on are those that do it on an ongoing basis, now by some writers being made to look like victims, instead of the extraordinary irresponsible people they are.
One term thrown around is “hidden fees.” Now are you telling me people that are charged for overdrafts to the tune of thousands a dollars a year in some cases are shocked each time a fee is charged to them? It’s absurd to even attempt to pretend that’s the case.
Major banks like Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) announced they would take action on some of the fees, especially those that weren’t as high as others.
The banks will only have a couple of options if the fees garnered from irresponsible people are forced to be dropped: either they cut back even more on costs, or they’ll have to charge responsible customers for the use of their existing free accounts to make up for the revenue, which is about 6 percent of operating revenue for American banks at this time.
Some weighing in on the issue say it’s a good thing to get rid of allegedly hidden fees, as it would allow consumers to know exactly what the costs of doing business with the bank would be. There’s only one problem with that assertion: most of us already know what the cost of doing business monthly will be, and we responsibly take care of our business like we should.
Many writers in the financial media continue to repeat this ignorant mantra that the costs are hidden, while then commenting on how it’s costing some people thousands a year in fees because they never stop over-drafting their accounts. Anyone see anything wrong with that picture? If you pay only a couple of times in fees for over-drafting your account, you know the fee is there, and if you do it again, you know you’re going to get hit with it. Any questions?
The point of course is that people are willingly doing this, and then complaining when they get clobbered with fees, even though they know they’re going to. It’s like a cigarette smoker who continualy smokes, and then pretends they didn’t know it would cause health problems.
So in the end, we may have to pay the costs for the irresponsible again, because they refuse to change their habits, and then the clueless in the financial media repeat what they say without even thinking through what they’re asserting, or ignoring it as if being responsible with your finances is the duty of the bank.
Now the government, in the growing role of being the nanny state, are going to swoop in like the heroes they pretend to be to take care of those bad banks charging fees for the use of their overdraft service, which in essence is a loan. Why shouldn’t there be interest on a loan you take out, which is what an overdraft fee really is.
Unless you think the banks don’t bear some responsibility in this, they do, as far as the first-time fee which the consumer was never told would be assessed a penalty. But even then, what is that person doing over-drafting their account? Aren’t they even balancing it and knowing what it is from day to day? All you have to do is go on the Internet or check your check book to see where you stand. How hard is that?
Either way, the politicians see a way to ingratiate themselves to the irresponsible few again, and the financial and regular media will pick it up as if they’ve taken on the bad capitalists and cut back their bad behavior, while in reality all they’re probably doing is causing us to pay for the actions of those who refuse to take responsibility for their finances. In other words, they’re going to keep “borrowing” money from the bank at the expense of the fees they’re hit with until they can no longer get away with it, and then the rest of us will probably have to pick up the tab.
The only other scenario would be like I mentioned earlier, that the banks would make significant cuts in their costs of doing business. Now which one do you think is going to happen?
