BANKS SEE HUGE WINDFALL FROM OVERDRAFT CHARGES

August 10, 2009

The Financial Times is reporting that banks expect to receive over $38 billion from Americans this year from overdraft charges alone. These figures have been confirmed by JP Morgan Chase, Citibank, Bank of America, and other major banks and are another slap in the face to their customers.

These banks have hiked their charges for overdrawing their accounts in recent months and have added increasing penalties for additional charges against the overdrawn account. There are reports of banks charging a customer $385/day when their account became overdrawn. It's not a question of penalizing for an overdraft, most would agree that some financial penalty is required, but to profit to such an extent from customers who are either already in a poor financial situation or simply made an error reconciling their account is the height of audacity!

We shouldn't be surprised that banks are taking advantage of us. They continue to ignore hundreds of thousands of homeowners who are struggling with fraudulent mortgages that were illegally packaged and sold as investment products. These banks and financial institutions, including mortgage companies and hedge funds, have profited to an astronomical extent at the expense of tax-paying Americans.

By continuing to accept checks and charges against an already overdrawn account, the bank has a huge upside from overdraft charges and the customer has no recourse. Congress must immediately require banks to stop this practice. Penalize the customer once for a reasonable amount, stop taking additional charges against the account and immediately notify the customer when the overdraft occurs.