The banks make nice

Bank of America and JP Morgan Chase have announced new rules on overdrafts, and they favor the customer. Uh, some customers.

Starting October 19, B of A will allow customers to shut off their checking accounts when the balance hits zero. The bank will also stop charging fees for people who overdraw their accounts by less than $10 in a single day. Chase will not charge fees when accounts are overdrawn by less than $5. By next year, Chase will also credit all transactions chronologically, instead of processing higher amounts first. There are other measures, which you can read about in the New York Times. Also from the article:

Bank of America said it was spurred by consumer demand rather than legislative pressure to change its policy. "We made the decision that we had to help customers now and help those most stretched by the economy," said Brian T. Moynihan, president of Bank of America's consumer and small-business banking operations. "They found themselves getting hit by too many fees, and they said, 'Help us out.' "

No, really, why are the banks doing this? It's not because they want to help people out. It's a business decision. Are they afraid of losing customers? Or have they simply done the math and figured out that they can announce new customer-friendly policies and still make a killing on overdraft fees?

Bankers will tell you the amount of the fee makes no difference. People who overdraft will overdraft no matter how much they are charged. But it's possible that some customers have started to learn their lesson. From an American Bankers Association survey, via Marketwatch:

36% of those caught without enough in their checking or debit accounts got hit only once in the last year with an overdraft fee.

At the same time, however, 35% got stuck with four or more overdrafts. Eleven percent of those had six to 10, which at about $29 a pop could cost a consumer as much as $290.

Everyone can make a mistake now and then, and many people are financially strapped, but what's with all the overdrafting? Overdrafting is borrowing money from the bank, plain and simple. You're likely to get away cheaper using a credit card or a credit line.

Customers complain about the banks playing tricks with the timing of deposits and credits, but bottom line, this issue boils down to: you either have the money or you don't. Doesn't it?

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