Wednesday, February 24, 2010

Dear Big Government, please leave the banks alone.

I keep hearing this incessant sniffling sound. It's the sound of everyone crying over bank fees. But don't you worry: the government is swooping in to tell the banks how to do business- how to make less money. To the untrained eye, this looks like a recipe for consumer success. This is because the untrained eye is on the face of someone who thinks that if overdrafters don't get charged a $35 fee every time, they'll actually save that money or put it to good use. It comes from the assumption that serial overdrafters were planning on spending that money on very important things: things that would improve their lifestyle and help them break the painful, perpetual cycle of doom. A cycle the banks have inflicted on poor, unsuspecting, otherwise responsible spenders.

I was inspired by an article on MSN Money, Should you opt in for overdraft protection? I will agree: overdraft fees are no fun. Back when I didn't keep track of my spending, and even more importantly, when I was spending irresponsibly, I incurred lots and lots of $35 fees. Lots. I cried. I whined on the phone to a bank rep. I got some refunded. Other times, I sadly accepted my negative status, continually paying my bank hundreds and hundreds of dollars. Sometimes, I even knew I was going to overdraw my account, but I so badly needed whatever it was I was purchasing that I did it anyway. And let me tell you, I deeply hated my bank for that. Passionately.

But then I joined forces with the evil industry that is banking, and I discovered that I did it all to myself. Karen Datko writes:

While you were paying that $35 fee so that your empty account would cover the price of that pack of gum, the banks were making an estimated $20 billion last year in overdraft fees on debit card and ATM transactions, The New York Times reports. If we all decline to opt in to overdraft protection, the poor dears will have to find another way to make that money.

In this scenario, who made the decision to buy the gum? The consumer. The bank didn't make you buy the gum. The bank actually let you. They just charged you $35 to do it. That is some expensive gum, my friends. I'd like to think that you wouldn't ever buy that kind of gum again. But unfortunately, as Datko also tells us, so graciously:

“According to a Federal Deposit Insurance Corp. study in 2008, 93% of overdraft fees come from the 14% of people who exceed their balances five times or more in a year,” The New York Times reports.

Did anyone else catch that? It's the same 14% that just keep doing it over and over again! Five times a year is an understatement, by the way. Try five times a month in some cases. Those people just love that $35 gum. But the government is changing all the rules, 14 percent. They are going to make sure that the bank can't make money on your self-inflicted circumstances.

Let me not sound insensitive. I care, really I do. If you accidentally overdraw your account once or twice, I commiserate with you, because I have been there. But if you do it all the time, and you complain about it, I'm going to ask you now: just stop. Stop paying the bank. If you stop paying them these ridiculous fees, then you have won the battle. But as Datko calls them, "the poor dears" are counting on your blunders. They know you'll do it. Again and again and again. Supply and demand, my friends. Free market. Well, until now. Apparently now we don't like for businesses to make any money. Because that is just terrible for the economy we are supposedly so concerned about. (But is the government concerned about the economy, or the 14 percent?)

By the way, while we're on the subject of "the poor dears," I'm not sure if anyone else noticed but banks are failing. They're dropping like flies out there. Maybe they should actually start charging people more. Do you know why they're failing? Because people aren't paying their loans back. I know I know, they were bad loans, balloon loans, yada yada. Banks were greedy. But the fact remains that the consumer signed off on it all. We have a case of gimme, gimme gimme here. It's a bad one.

And here's another by-the-way: if banks don't make their money on overdraft fees, they will find a way. Trust me. And you know what? That doesn't bother me because I'm employed by one, and so are millions of other Americans. Hello, newsflash: we should like big business. They employ us! Hip hip hooray, I have a job!

Here are my tips, but they don't matter at all, because I can assure you that the majority of the people who are paying overdraft fees will not change their ways:
  • Write down everything you spend. I know it's old-fashioned, but keep a register.
  • Save money. You can, no matter what you say. Dave Ramsey says so.
  • Listen to Dave Ramsey.
  • Get to know your banker. Being nice and having a personal relationship goes a long way.
  • Do your research. Understand your bank's posting order and when funds are available. Never assume anything.
  • Stop spending so much on things you don't need! Just stop. Seriously.
  • Create a budget and leave wiggle room. Then stick to it, with minimal wiggling.

Here's the bottom line. Stop being a victim. The whole reason we're in the situation we're in is because no one wants to own up. Everyone wants life to be easy and free. Life is not easy. It is not free. Work hard. Be responsible. Manage the money you have worked so arduously at making. You will grow to appreciate your bank. Bank's have to pay the FDIC more money because the FDIC is charging more to be insured these days, because loans are not being paid and banks are failing right and left. It is expensive to be a bank. Banks take a hit every time people file bankruptcy and let their credit cards, checking accounts and loans go to collections. They give their assets to a friend or relative and them pick them back up after the bankruptcy is complete. This is irresponsible, and they should be ashamed. We're all so convinced that we deserve the American Dream. No one deserves anything. Work hard and be honest. Don't buy more than you can pay for. Didn't Jesus say we should be humble? Take his advice. Stop blaming businesses and everyone else for your financial problems. Man-up, woman-up, and do something about it. Stop waiting for a bail-out and change your own life.

Stop the crying! Quit the sniffling! Wipe away those tears and turn that frown upside down. You may not be able to change the economy, but you can change your spending habits. I promise.

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