Dear Liz: I did not like your answer to the person who was hit by overdraft charges. You blamed the lower-income banking customer for the bank’s policy of using the larger overdraft to create her subsequent multiple overdrafts and thus take more money from her.
It’s the bank’s anti-customer policy that is in error here, not the person living paycheck to paycheck. Your answer should have started out by telling the customer to find a new bank, rather than essentially defend the bank’s policy. Your final 4 words in that answer — “take your business elsewhere” — just doesn’t give the rest of your answer credibility. I am disappointed enough to write you.
Answer: There’s no question banks aren’t being consumer friendly when they deliberately process the largest transactions first to increase the chances that subsequent transactions will bounce and generate more fees.
There’s also no question that low-income folks and seniors on fixed incomes pay a disproportionate share of these fees.
But the person living paycheck to paycheck isn’t a powerless victim. She can sign up for true overdraft protection instead of “courtesy overdraft” or “bounce protection,” and set up a balance-monitoring system that alerts her when her funds are low. (Most banks offer email or text alerts, or she can simply call in to check her balance frequently.)
Most importantly, she can take steps to change the way she handles money so that she’s no longer living paycheck to paycheck and instead has a cushion in the bank. If she doesn’t understand how to do that, there are a wealth of Web sites and blogs written by people who once lived paycheck-to-paycheck and have since figured out a better way. Two good blogs to start with are The Simple Dollar and Get Rich Slowly.
Dear Liz: This is in response to the column about outrageous bank overdraft fees. The customer who got stiffed should have gone into the bank in person and “pitched a fit.” A similar thing happened to my daughter when she went away to college. I went into the branch to complain and was pretty riled up with my voice escalating in outrage. They took care of the fees very quickly and set up a better overdraft system for her as you said to do. They did not want a shrieking woman in front of the other customers.
Answer: That bank was smart to take care of a mama bear defending her cub. Unfortunately, most banks that inflict “bounce protection” on their unwitting customers are used to hearing, and dismissing, protests over the outrageous fees that result.