I think the federal government should start using FDIC as a stick here. It could be fairly straightforward: if you want to be an FDIC member, you must offer basic banking. In particular, you must offer anyone who is legally in the US a free checking account. The terms must be more or less standardized. No arbitration clause, no limit on class-action lawsuits, no check deposit fees, no in-network ATM fees, no under-minimum fees, no overdraft fees. If a bank wants to participate, it should be required to offer banking.
Eh. They do offer banking. But banks make their money investing your money.
Also, I think "no overdraft fees" is just as wrong as overly punitive overdraft fees. If there were no overdraft fees, credit cards and small loans just wouldn't be a thing. Just overdraft your account and treat it as an interest free loan.
When you overdraft, you are no longer dealing with your money. You're dealing with someone else's money.
Not if I write a check. And from what I recall, when you make a purchase, they don't check against your projected balance at that time, but your actual balance.
So if I have $100 in my account and a pending debit of $50, if I try to make a purchase of $60, it'll get approved because I have $100 in my account.
Now, there are potential things it could do, like treat pending debits like cleared debits. I mean, when I check my balance on my app, it shows the balance with the pending transactions accounted for.
And that does prevent overdrafts from ATMs and debit cards, but there are other debits to the account that could cause overdraft.
It's practically a no-win scenario. If I have an automatic payment to my electric company and I don't have the funds in my account to pay it, I'm fucked no matter which way you look at it. Either I overdraft or my electricity gets shut off due to non-payment.
Banks don't have to accept overdrafts on checks either. That's what happened when someone says that a check "bounced". The person you wrote the check to won't be pleased because they don't get their money, but the account won't get overdrafted.
Allowing overdrafts because of pending debits is also just a decision that the bank makes. They don't have to do that.
I mean, when you really look at it, banks aren't really up to speed with the speed of information these days.
A lot of these things that shouldn't be issues are issues because they're still operating as if there are still people who are managing most of this and physical checks and credit slips are being passed around.
None of these scenarios require them to allow overdrafts. Even operating by passing physical checks around does not make allowing overdrafts necessary.
Refusing to honor checks drawn against accounts with insufficient funds has been around for ages, even when everything actually was managed by passing around physical checks.
> That’s not really relevant. If a bank wants to offer, in plain English, a credit service in which overdrafts turn into loans, fine. But part of the problem with the unbanked/underbanked is that people can be quite justifiably worried that the bank will take away their money by nickel-and-diming them.
Anyone should be able to open a bank account without a credit check or abusive fees. A checking account is not credit. Allowing overdrafts to become abusing loads is credit, under terms that could easily be seen as usurious.
