Boosting Overdraft Fees Big Business for Banks
The L.A. Times reports on how your bank is likely ordering transactions in a way to boost their fees while making you pay:
Pew analyzed 44 of the 50 biggest U.S. banks and found that 18 of them process debit transactions — purchases, payments and withdrawals — in order from the highest amount to the lowest. Instead of processing transactions in the order that your bank receives them, banks can choose to process the biggest first, which brings your account balance down more quickly. This can lead to more overdraft fees.
Here’s how it hurts:
“Transaction reordering from high to low is a practice that harms consumers, and regulators really need to ban it,” said Joy Hackenbracht, research officer on the consumer banking project at Pew. The nonprofit research group in Washington, D.C., has advocated for better consumer protections on prepaid debit cards for many years.
Watch carefully when your bank processes transactions, especially those that lead to overdraft fees. You can call them on it, and they may offer you a refund of some of the fees.
We’ll be watching for legislative and regulatory actions that could help address this concern that hits working families the hardest.
For more on consumer protections in the economic marketplace, follow @TNCitizenAction
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