Joe Biden Moves To Slash Bank Overdraft Fees With New Rule

Democrats: "This one thing doesn't go far enough at all! There is no way in good conscience I can support this man!"

Voter: "I don't see how Biden's any different"

Biden: Wants to do something good for a lot of people

It's a bandaid on a massive headwound...

Then sending you home while still concussed and bleeding everywhere.

Sure the band aid is better than nothing, but if people are having multiple overdrafts a month, then their real problem isn't how much an overdraft fee is.

Say someone has 4 a month, that's a lot, and I doubt many get that consistently.

Going from $33 to $3 saves 120/month.

It's not nothing, but that person is still negative on their bank account. Probably carrying a shit ton of credit card debt. Speaking of, doing something about interest on predatory lending (including credit cards) would be much more effective, but hurt the rich and banks even more

The main issue is a lot of people do to have enough to live.

its better to do that otherwise you get banks suing and the supreme court siding with the banks

It's not fair because of the risk of total loss. You giving money to the bank earning interest, there's no risk the bank is just going to stop responding to you and keep your money. There's a chance someone who owes the bank money is just gonna stop going to that bank and they'll have to write off the full amount as a loss.

But, I believe this is essentially what they do in Canada. It's two different rates, because a negative balance is essentially taking out a non-collateralized loan. But you don't have to ask extra permission on small amounts, you just owe the interest.

All poor people taxes while we're at it. Inertia is fucked up.

Wait so Biden introduces a plan to at LEAST halve overdraft fees and we're whining before anything even happens? Is it not reasonable to at least take input from the industry you're regulating? Don't you want to know how they will respond and what impact they foresee, biased or not?

If they only listened to the banks they wouldn't propose the rule at all.

banks are the ones implementing them and they don't have to listen to the cdpb, thanks to the supreme court, so it's best to work with them

I'll take your cynicism a step further.

The bureau with consumer protection in its name didn't even come up with a zero number. It's not even in the cards. From the protection bureau.... Fuck me

Normal in the U.S.. When I was an expat in Austria, my bank didn’t charge anything for a negative account balance.

"to my understanding most cards in the US are credit cards"

This statement confuses me a bit, but I guess that adds to the misunderstanding? Debit and credit cards are tied to different types of accounts. Which you're using depends on if you have the money and want it immediately removed from your checking account, or if you want to "borrow" and pay the total once a month.

When I helped my sons open their first checking accounts and got their debit cards, we had to "opt in" to not allow overdrafts and to have purchases cancelled, but that option would expire once they hit a certain age and would have to select it again. The backup to that is if you have a savings account, the accounts can be linked so that if you were to overdraft, the extra would be taken from savings to prevent overdraft fees.

These are all great things, assuming you have money in the first place. If you believe Americans are using credit cards more often than debit, it's probably 1) because CC companies incentivize us to do so, or 2) people just generally don't have the money to meet their needs in the first place, so juggle and borrow funds as they try to keep their heads above water.

Actual poor people can't get credit cards, then a few dollars of overdraft puts them deep in the negative. Guess how many hours a minimum wage earning american has to work to overcome a SINGLE overdraft fee...

You either have a very different debit card system than the US, or a very different definition of the word sane. I assure you that in the US, debit cards are (generally) not the better option.

In fact, I can confirm it - you have it completely wrong. It is only debit cards that can have an overdraft. Credit cards are when you have an ongoing, semi-permanent line of credit available to you. Let's say this limit is $1,000. Each time you use it, the credit card issuer pays the merchant. If you attempt a purchase beyond that line of credit, you may (and often are) denied the purchase. If it does go through, you will have to pay an over-limit fee. The credit issuer then sends an itemized invoice, typically at the same time each month, and you must repay them. If you don't repay them in full by the deadline, you must pay interest. The main takeaway is that credit cards are always someone else's money at the time of purchase.

Debit cards are typically linked to your personal checking account. They work differently on the backend, but are usually similar at the point of sale. Checks, which link to the same account on the backend, often bypass validation of funds. Your bank processes the transaction on your behalf, but (again, typically) has not granted you any line of credit. If you get a transaction through where you don't have the funds, the bank is then forced by their agreements with the payment processor to extend you a line of credit. But the main takeaway is that debit cards are your own money, in your account, at the time of purchase.

It's a common (but dangerous) trick when you're low on funds to use credit cards to "float" an expense. Debit means you must have the funds presently available in your account, which often means they must have been deposited a few days ago. Credit means you have until your next statement to arrange them, which likely includes at least 1 payday.

See, your assertion rings as false for me, because as an American I've definitely run into things with my debit card where the problem was that the transaction was being treated as a check in the background, which meant it takes up to 3 business days to get through the check clearinghouse (even if you paid with your debit card and not a physical check), and during that period, that pending transaction doesn't even appear on your online statement. (In modern days, Venmo is bad about this, but in the past it was random places that could do it to you.) So if you didn't keep the mental tally of transactions and didn't have much money, it was very easy to forget an invisible pending thing and accidentally overdraft.

And, obviously, credit cards don't do the check clearinghouse thing, that's a debit card thing.

Given the things fucking up the gears is the check-style old-timey clearinghouse shit going on in the background, I fail to see how making the card/transaction even MORE "debit-y" would fix it.

So you, or me, or perhaps both of us, don't understand some significant differences in how your country processes debit transactions behind the scenes compared to mine.

Maybe you should elaborate how debit works in your country?