The FDIC released a study showing their disapproval of overdraft fees - the $20-$30 charges they ding you with every time you spend more than you have in your checking account.
The FDIC's view is that low-income consumers are hardest-hit, and they aren't even aware that they get enrolled in overdraft protection plans. What's more, some banks strategically process checks in a way that maximizes their revenue and your pain.
Make sure you're not wasting money on overdraft fees. The most important thing to do is watch your budget. However, if you occasionally spend more than you have available in your account, look at less expensive solutions like overdraft lines of credit.
Further reading:
With the ongoing sub prime crisis, the tenant loan lenders have been hit very badly. The lending giants like City Financials have already closed their business of lending. So primarily the tenants are in a big soup at this point of time where the option for them to take out a loan is very limited. Halifax and RBS just lend to the clean credit customers which are hardly many. So the sub prime customers just have to try their luck with Welcome, Everyday and some small payday lenders who will just lend upto 2000 pounds maximum. So the situation for tenants to get a loan has become very difficult. And therefore the need has arised that they should start reviewing their expenses and be very careful with what they spend. Because they just can’t afford to fall in the debt trap at this crucial moment when cost of living is getting expensive and income and job security is on declining.
WAMU would be likely the worst offender in actually promoting overdraft fees. Me, a widow left with 4 children try my hardest to balance my account on a daily basis using on line banking. I think I have it all zeroed out and then like a bomb all these charges hit my account. You see WAMU gives NO warning whatsoever that some unknown source is coming through and they post it two days after it hits. Is this fair to the customer? I think not. The charges by a bank for NSF or overdraft far exceed what a payday loan shark would charge…I went in and asked they remove my overdraft line of credit and they said sure…but never did and now I am on disability due to being ill and they have put me in chex systems. I think this could easily become a class action law suit against banks like Washington Mutual because they are dishonest and liars too…
I agree and feel your pain! My sister-in-law came from Ireland and opened an account at Chevy Chase and they do the same thing–only worse. First of all, somehow she got signed up for two checking accounts. I was there when she applied for an account and at no time did she ask for two checking accounts be put in her name. Then, all of her money went into one account while no money was deposited in the other one. Unfortunately, the Debit card was linked to the account with no money in it. So off we go, happily spending her money when a week later (that’s one week now, mind you) she begins to get notices in the mail saying that she’s over drawn and was charged $35.00 each time. This meant that each time she charged something, no matter how small, say, one dollar, she was charged $35.00. If she charged ten things in one day, she racked up $350.00 in charges. We went to the bank but they refused to refund her the money. Now, if that’s not illegal, it’s downright unethical.