this post was submitted on 17 Jan 2024
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Politics
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As a European. WTF are overdraft fees?
Second sentence in the article: "Under the proposal, banks could continue to charge fees when a customer’s account falls below zero..." -- that's what it is. Back in the day, if you wrote a check for more than you have in your account, the bank would not only bounce the check (refuse to pay so the check holder wouldn't get your money at all), they'd charge a fee on top of that so your balance would go even lower (sometimes below zero).
Here they just let your balance go below zero (or below the maximum negative balance if you have that enabled on your account), and you get a notification to please make sure your balance is above the limit within X days or they will block any pending payments. The only charge is whatever the interest rate is you pay for a negative balance, so depending on the amount it could be a few cents or so.
Cheques haven’t been a thing in Europe for over 20 years or so, but back when we had them they were guaranteed up to a certain amount. Basically, they would never bounce as long as the amount was under the limit. This also meant that no one would accept a cheque over that limit, in which case you just wrote multiple cheques (the bank would only give you a limited number of them at a time, IIRC it was 10 for a standard account).
A lot of us in the US still pay rent in checks. I get them from my bank in books of a hundred, and there's no upper limit on how big they can be.
Anything that risks bouncing requires getting a fancy check (certified) where they take the money out before issuing the check.