What We Already Know: Banks Want Us to Stay in Hock

The NY Times has an article out today about the bank industry’s response to legislation that will require customers to "opt in" in order to overdraw on their debit cards. Another open invitation to the heroin den with free hookah.

If you don’t contact us, your everyday debit card transactions that overdraw your account will not be authorized after August 15, 2010

Call me an old crone but when I was growing up the words "over draw your account" were very very bad. I was not sure I read this right.
Mr. Dosido and I didn’t know that one could overdraw on an ATM card (we use our local community bank). But we found out once our daughter went away to college and signed up for a FREE!!! checking account with ATM card. I assumed that she would not be able to buy things with a zero balance. Silly me. Because she was inexperienced in using these kinds of things not called cash, she was soon overdrawn on her account.

Many Americans are way ahead of us, knowing this wonderful "social service" to spend more money than one has, is built into the game. So my daughter was charged $35 for a $10 overdraft. And for the next one and for the next one. Granted she should have been checking her account – online (you know banks are so green these days). So my college kid and many other consumers have given the banks

billions of dollars in penalty income

Penalty income. This is how banks make their money. Not by keeping our money safe but by encouraging us to spend beyond our means. And making it seamlessly easy to do so.

The persuasion campaigns, which are just getting under way, come at a precarious time for many banks and credit unions as they scramble to find new revenue streams amid an economic downturn and new laws and regulations that threaten profitability.

The banks are "scrambling" to find new "revenue". This is the crux of the matter, as I see it. The banks must keep people in debt in order to be profitable. Penalty fees are revenue they must "protect".

Our debt is their profit. Some social service.

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