The End of Overdraft Fees?

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Here’s the latest on the overdraft front:

In a move that could bring an end to the $40 cup of coffee, Bank of America said on Tuesday that it was doing away with overdraft fees on purchases made with debit cards, a decision that could cost the bank tens of millions a year in revenue1 and put pressure on other banks to do the same.

….“What our customers kept telling me is ‘just don’t let me spend money that I don’t have,’ ” said Susan Faulkner, the bank’s deposit and card product executive, who said the overdraft changes were part of a broader push to build trust among its customers. “We wanted to help them avoid those unexpected overdraft fees.”

Well, that was a quick U-turn. As recently as last year it was “our customers are telling us not only that they want overdrafts covered, but they don’t even want to be asked first and they’re just fine with us fiddling with the order of payment even if it maximizes the number of overdraft fees they pay.” Hell, Bank of America was famous for its unwillingness to ever allow anyone to opt out of overdraft protection no matter how compelling the argument. Now, suddenly, it’s “our customers don’t want overdraft protection at all.”

I’m a little short on time right now, so I’m not sure what to think of this. On the surface, it’s good news. If it’s a choice between unlimited overdraft fees and no overdraft fees, then no overdraft fees is a clear winner. But then there’s this:

“Consumers have shown a willingness to incur overdrafts if it’s covering mortgage payments or car payments, but not to cover a hot dog and a soda,” said Greg McBride, senior financial analyst at Bankrate.com and one of a handful of analysts and consumer advocates briefed by Bank of America on its new policy. “They don’t want to incur overdrafts on everyday purchases.”

So how hard would it be for BofA to give customers this choice: “please cover payments over, say, $200 but not anything below that amount”? Why no middle ground? I need some time to think this over, but something tells me there’s more going on here than it seems.

But hey — maybe I’m just overly suspicious of the banking industry these days. Maybe.

1Tens of millions? For a bank the size of BofA, wouldn’t the real number be somewhere in the billions?

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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