The customer advocates in the Center for Responsible Lending don’t mince words: “overdraft ‘protection’ is really a racket; perhaps maybe not a site.” CRL describes:

Transaction shuffling and numerous, excessive charges for tiny shortfalls within their checking reports cost Americans billions each year in unjust charges. Over fifty percent of Us americans are now actually residing paycheck-to-paycheck, making a lot of U.S. families at risk of bank overdraft practices which can be exceedingly misnamed “overdraft protection.”

In place, overdraft “protection” items could become like payday advances, with a high charges replacing for high interest, and customers vulnerable to getting caught in a period of financial obligation they can not emerge from. But as toxic as overdraft items could be for customers, these are generally extremely profitable for banking institutions. In reality, in accordance with a current Wall Street Journal research, some banks create a disproportionate level of their earnings in accordance with general deposits from overdraft along with other costs. [Read more…]