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."