Beware the Debit Card!

“Doublespeak (sometimes called doubletalk) is language constructed to disguise or distort its actual meaning, often resulting in a communication bypass. Doublespeak may take the form of euphemisms (e.g., "downsizing" for layoffs) or deliberate ambiguity.” Thanks to Wikipedia for the quote.

Politicians of both parties are particularly masterful at using language to obfuscate and to lie to the electorate about their true intentions. Banks, however, run a close second in their premeditated misuse of the English language to hide their true intent, the legal victimization of the careless, the unwary, and the ignorant.

This week I heard a discussion of debit card overdraft protection. Someone I have known for many years currently has a daughter in college. He was attempting to straighten out her checking account. It seems she has a debit card that she uses constantly for everything. She frequently forgets to enter these debits into her check register, spends more money than she has, and incurs overdraft protection fees. These fees typically run $30.00 per charge. In this particular case, the girl ran up over $150.00 in fees.

“If you overdraw your account with the typical fee and you pay it back in two weeks, you're paying over 500% interest," said consumer advocate Jeane Anne Fox. Tony Soprano would be ashamed to charge such interest rates but banks think it just fine. They generate $38,000,000,000 a year in pure profit by providing their customers with such a wonderful service.

Another person participating in this conversation told a story from his college days. Of course he didn’t have much money and like most of his generation he was quick to use a debit card instead of cash for small everyday purchases, like coffee, lunch, and miscellaneous school supplies. Then, every evening, he would check his checking account balance on line. On one particular day, he incurred 7 overdraft protection fees totaling $210! He called the bank and threw a screaming fit. He demanded they remove overdraft protection from his account and withdraw the fees. The bank withdrew the fees but encouraged him to keep the overdraft protection, telling him that it would protect him from the embarrassment of attempting to pay for something when his account was empty. This individual was having none of it and informed the bank he could tolerate a lot of embarrassment for $210.

This, by the way, is the official position of the banking industry. "It's a win, win," said Diane Casey Landry, president, America's Community Bankers. "It's a win for the consumer because their check is honored and they're saved embarrassment and they save on the overall costs. And, the bank gets to make a fee out of it, so I would characterize that as a win, win.”

We both suggested to the father he call the bank and ask that the fees be rescinded. He was embarrassed to ask because he had previously made calls on behalf of his daughter. In that instance the bank had rescinded the fees. I also suggested, plastic surgery, cutting the debit card into small pieces and teaching the daughter how to balance a checkbook. Cash works very nicely for purchases too small for a check. The father didn’t believe his daughter could learn to keep a checkbook in good order. I said no more. The father did call the bank and $50.00 in fees was forgiven. The father then covered the other $100.00 in charges.

It gets worse. If a series of checks or fees will throw your account into overdraft protection, the bank will process the largest charges first so they can hit you with more fees. If you use a debit card to rent a car or a hotel room, the vendor will put a hold on your account that is significantly larger than the expected charges. Sometimes the vendor will then forget to inform you of this little fact. Let’s say a total car rental bill is expected to be in the neighborhood of $135. The car rental company might put a $500 hold on your account as a form of self protection. If you don’t know this, you could easily rack up a lot of fees, thinking you had access to that $500 when the bank considers it already spent when calculating such fees.

Finally, unlike credit cards, debit cards do not offer you protection from fraud. Typically, incorrect charges in excess of $50.00 will become the problem of the credit card company. A fraudulent charge to your debit card is your problem until you prove otherwise.

Such abuses seem to put me into a minor prophets frame of mind. And hey, let's be careful out there.

Micah 6

[10] Are there yet the treasures of wickedness in the house of the wicked, and the scant measure that is abominable?
[11] Shall I count them pure with the wicked balances, and with the bag of deceitful weights?
[12] For the rich men thereof are full of violence, and the inhabitants thereof have spoken lies, and their tongue is deceitful in their mouth.
[13] Therefore also will I make thee sick in smiting thee, in making thee desolate because of thy sins.
[14] Thou shalt eat, but not be satisfied; and thy casting down shall be in the midst of thee; and thou shalt take hold, but shalt not deliver; and that which thou deliverest will I give up to the sword.
[15] Thou shalt sow, but thou shalt not reap; thou shalt tread the olives, but thou shalt not anoint thee with oil; and sweet wine, but shalt not drink wine.