Blog 11 - IMHO #2

A year ago, I visited Hawaii for my spring break. I used my ATM card to withdraw cash on several occasions while I was there. When I got back to San Jose, I checked my bank balance and found that I had overdrawn on my account. Over that, Bank of America had charged me two overdraft fees of $ 35 each. It was completely my fault, but they ended up revoking the fees as it had been my first time. A few weeks ago, I read an article in the New York Times and it stated that U.S banks make over $ 37 billion in overdraft fees a year. Now, I agree that banks should charge fees when a customers go over their limit. However, the ways in which they do it are completely unethical. Banks are clearly profiting from the mistakes and misfortunes of their customers.
This issue has been in the spotlight over the past year or so. Bank customers have launched several complaints over how they have been treated. In October 2009, there was a case with Bank of America customer, Tam Tran. He had to pay over $ 5,000 in overdraft fees. The bank kept charging him for transactions without notice. He didn't have adequate funds in his account but the bank approved the transactions because it claimed he was a trusted customer. I still maintain that people should monitor their accounts and learn how to manage their money. But, banks are conducting unethical practices when they capitalize on the mistakes of their clients. The fact that America's largest banks, including Citibank, Wells Fargo, and Bank of America, have gained over $ 37 billion in revenue from overdraft fees is a complete outrage.
The problem I have with this issue is that banks aim to profit from their customers when they are supposed to be protecting them. When an individual opens an account in a bank, he or she is trusting it with his or her money. It absolutely should not allow you to spend money that you don't have and then charge you a fee on top of that. Banks have billions of dollars in reserves and can easily cover customer's petty transactions. A person being charged a $ 35 fee for a $ 2 cup of coffee is wrong. I realize that, like everybody else, banks are trying to make money. However, the terms and conditions of overdraft fees are completely unethical.
I am happy that this issue has been brought to the Federal Courts. After all, I am a victim of this malpractice, even though I take full blame for my action. I am happy to report that Bank Of America has announced that it is ending overdraft fees on debit cards. This is a step in the right direction.


References:

http://www.nytimes.com/2010/03/10/your-money/credit-and-debit-cards/10overdraft.html

http://www.forbes.com/feeds/afx/2009/10/30/afx7068152.html

http://www.usatoday.com/money/perfi/credit/2009-09-28-overdraft-fees-anger-regulation_N.htm

http://www.theatlantic.com/business/archive/2009/08/americans-pay-38-billion-of-bank-overdraft-fees-a-year/23020/