Back when I was a new bank customer, I went to the bank to deposit a check at 2:30 PM. The check, which was my entire month’s earnings, deposited just fine, and I got a receipt back that showed my “ledger balance” at well over $1,000. So, silly me, I went to the grocery store. I purchased, as you could probably guess, groceries. I then went to a coffee shop and purchased a drink, and to a bookstore to purchase a book, all on my debit card. I knew that my total purchases were well over what I’d had in the account before the deposit, but that shouldn’t have mattered, because I’d just deposited a big-ass check. I then purchased gas for my car, went home, and proceeded to live the life of the temporarily financially secure.
The next morning, I checked my bank account online. I found three overdrafts for $36 each, because the “ledger balance” wasn’t the “available balance”. Presuming there was some sort of processing error, I went to the bank. I was told that “ledger balance” just showed all the money in the account after all pending transactions had processed. I showed them my receipt and asked them where it told me that. It didn’t. I then asked why I had three charges – the answer was that the largest transaction was processed first, the smallest last. Asking why that was, I was told that the bank was simply protecting customers. After all, it would be far more embarrassing to have a big purchase declined than a small purchase. That was a great explanation, I thought, except that they’d covered all of the transactions. If they’d declined the drink (which sent me into overdraft), I not only would have avoided the other purchases, but I could have paid for the drink with the couple of dollars I had in my wallet. The five seconds of alleged shame I would feel was worth far less than the $108 the bank was now demanding of me.
When the New York Times advocates for changes in overdraft policy, I’m all for them. But I’m surprised they missed this part of it – the part where banks maximize the pain of overdrafts through the pretense of customer protection.
It’s one of those grand bits of fuckeduppedness that makes you realize something else is at work when protesters show up at town halls bemoaning “government control of healthcare”. Down to the way we spend our money, the very basic “choices” we make (and the “choices” that these protesters are concerned with) are largely controlled by the profit-seeking motivations of the industries that govern said choices. The only reason that Americans even trust putting money in the bank is because the federal government insures our deposits; after that, we’re pretty much at the whim of the bank to honor that slip of paper we give them that says someone else is paying us for our work. Nothing in this realm of private regulation is a restriction on choice, ever. It’s just the marketplace at work, naturally doing that thing it does so well. There’s never room to argue with it, because you could always theoretically go to another option, even if the option doesn’t actually exist (try to find any national or even regional bank that doesn’t do the same thing with overdrafts).
If you show up at your Representative’s townhall screaming about Hitler and carrying your gun around as a message, you get on the national news and affect a national debate. If you do the same thing at your local bank or insurance agency, you find yourself in jail next to a guy who smells like Wild Turkey and old hot dogs. Yet somehow, it’s the elected official who’s on the verge of instituting a totalitarian regime which will ruin your life and kill Meemee when she gets glaucoma.