Banks Still Raking In the Profits from Overdraft Fees

  • Ban all overdraft fees on debit card and ATM transactions. These transactions can easily be declined at the point of purchase, at no cost to the consumer. The only reason for doing it the way we do it now is to shovel more money into the banks' coffers.
  • Lower fees, and make them proportional to the amounts involved. The average large bank charges $35 per overdraft. That's ridiculous. It simply does not cost banks $35 to extend a short-term loan to a customer --- especially since most transactions are for extremely small amounts. Rather than being a profit center for banks, overdraft fees should be proportional to banks' actual costs, just as the FDIC requires of penalty fees on credit cards.
  • Overdrafts by paper check cannot be automatically declined. If a customer incurs six such overdraft fees in 12 months, they should be given the option of paying off those short-term loans (which is what an overdraft fee is) in installments.
  • Ban payment chicanery. Many banks and credit unions have stopped processing purchases and ATM withdrawals as the transactions happen. Instead, they post the biggest transactions first, hoping to drive customers over the limit. This must end. Customers have the right to expect that their transactions are being processed as they are made, and that they are not being forced into paying high fees by bank trickery.
  • If banks want to extend credit by way of overdraft fees, they need to tell customers exactly what the APR is on each short-term loan.

Predation is as old as the food chain, and it is nature's way to favor the strong. But we're building a civilization, not a Darwinian theme park. For our nation to move forward, we must broaden opportunity and strengthen each individual's prospects of success. Above all, we must not allow the most vulnerable members of our society to be tricked and exploited to fatten the sharks circling among us. Success is a good thing, but not at the price of our soul. We can do better than that.

Adam Levin is chairman and cofounder of and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
blog comments powered by Disqus
You Might Also Like...
See It, Share It
United States Carli Lloyd celebrates with teammates Ali Krieger and Morgan Brian after scoring on a penalty kick against Germany during the second half of a semifinal in the Womens World Cup finals, Tuesday, June 30, 2015, in Montreal, Canada.
Ryan Remiorz/The Canadian Press via AP
Elaine Thompson/AP Photo
PHOTO: In this image released by Lionsgate, Theo James, from left, Shailene Woodley and Miles Teller appear in a scene from The Divergent Series: Insurgent.
Andrew Cooper/Lionsgate/AP Photo
PHOTO: Venus and Jupiter rise together in a rare conjunction over the Robert F. Kennedy Bridge in the early morning of Aug. 18, 2014 in New York.
Stan Honda/AFP/Getty Images