Banks have always been a person’s best friend, or worst enemy. And lately, banks have not been enjoying the limelight during the economic recession and the public’s ire at being bailed out while other industries were left to go bankrupt, leaving the banks to reassess many of their policies that, while it benefitted them during the economic boom, now are dragging them down, such as overdraft fees.
Bank of America is one of two banks that have been in the news lately for reducing overdraft fees, along with JPMorgan Chase.
Bank of America’s last major stint in the news was when it had to back down from a particularly harsh YouTube video, in which a former Bank of America customer Ann Minch laid down a scathing response to Bank of America’s massive increase in her Annual Percentage Rate from 12.99 percent to 30 percent, effectively doubling her APR after two late payments which Minch claimed that were on time.
This sort of reaction is not uncommon, and Minch was fortunate that her YouTube video went viral and resulted in a major public relations embarrassment for Bank of America. Had it not, she would still be suffering from a jaw-dropping high APR. Unfortunately, the rest of us can’t be as fortunate.
Overdraft protection was one of many systems that seem benign, but wreak havoc if the customer is not on the ball and keeping on top of it.
Now, in the wake of a major report issued from Moebs Services, stating that the major U.S banks will have a net profit of $38.5 million in overdraft fees from just this year alone, more than double than the $19.9 million from 2000.
In the light of Moebs report, Bank of America and JPMorgan Chase are overhauling their debit systems work, with Bank of America giving customers the chance to opt out of overdraft protection, which in reality charges a person more if the purchase exceeds what the customer has in their account.
JPMorgan Chase went about it a different way, by turning off overdraft protection from all customers, unless the customer opts in, which essentially means that for emergencies, people should do the age old standby of having one credit card specifically for emergencies.
Is this a good sign that the banks have finally realized that the good times have passed, and that they could no longer throw their weight and suck their customers dry with outrageous fees?
It is doubtful, of course. Banks are a business, and will find a new way to extract money from it’s customers through one program or another, and it will always be that way unless there is genuine reform and regulation, which these days, are dirty words.
As always, when dealing with the banks, you must be on your best performance in dealing with them, reading the fine print, and not taking things at face value.
But for the moment, we should enjoy these momentary reprieves where banks finally serve their customers, and be grateful that some banks are doing away with systems designed to catch their customers doing what they do best, spending during the time the economy needs it most, and punishing them for it.