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Debit Card Overdrafts Bring Banks Billions
Fees make credit card shopping look like the smarter thing to do
By Matt Cantor
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Posted Sep 9, 09 9:29 AM CDT
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(Newser)
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Debit card overdraft fees are helping to pay banks’ bills in the recession—and they're hitting customers hard, the New York Times reports. “Banks will let you overspend on your debit card in a way that is much, much more expensive than almost any credit card,” says an analyst. Spending money you don’t have can result in massive fees—the Times calls out one shopper who was slapped with seven $34 fees in one day: Banks are set to make $27 billion this year on checking-account overdrafts.
Banks actually make more money covering such overdrafts than they do from credit card penalties, the Times notes. Regulators are starting to get tough on debit card issuers, calling for fairer fees or for banks to get customers’ consent on overdraft programs. But banks aren’t going to be swayed easily, arguing that it’s the customer’s job to be aware of how much is in his account.