New York Times Story on Debit Card Overdraft Fees

by Brian Wolfman

The front page of the New York Times has this excellent piece on overdraft fees imposed on debit card holders. As the beginning of the article explains, debit card holders are not told at the point of purchase that they have exhausted their funds; rather, they learn only later, after they are hit with fees:

When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully. So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.

The in-depth article discusses possible legislative and regulatory responses, including not allowing consumers to overdraw or giving consumers a point-of-purchase option not to buy or to buy and incur a fee. The banking industry has a number of replies, including that it is "merely charging a fee for a convenience that protects consumers from embarrassment, like having a debit card rejected on a dinner date. Ultimately, the the add, consumers have responsibility for their own finances."

Comments

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love the blog. Lots and lots of useful information in just this post alone. I'm off now to read some more posts. Thanks.

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Incredible story! I would be terrified in case I would see in my account such manipulations. It is better to have close debit card in case of big minus on account and to know that you cannot spend more money! Anyway, thanks for the information, it is important to know.

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hey, this is a nice post. Everyone should be clear about the functionality of Prepaid Debit Credit cards.....

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hello guys, I really like this post, the events in general are things that draw little attention, thanks for sharing the information, and answer many questions I would like updates to this article, thanks