Bank of America announced recently that it would stop charging overdraft fees on debit cards.
It is about time.
From now on, the article in the New York Times says, customers who do not have enough money in their accounts to cover the charge will just be denied. Imagine that — not being able to spend money you don't have. For a cup of coffee or a movie.
I think the overdraft concept never was a good idea. I can see, if used wisely, how it has its benefits; people who just made a mistake would not have to have their cards turned down. But really, having overdraft to avoid embarrassment? Give me a break. And most people who might responsibly use overdraft as a tool (i.e. they really need something and have no other way to get it) probably never would, because it's not a responsible tool. It's like the cash advance places; they're never a good idea. Those people, who would use it once and learn from it, most likely have a savings account to turn to and/or a credit card for emergencies.
It ended up being just a cash cow for companies and gouging of people who could least afford it. Hello, Mr. Wall Street, these people didn't have money in their accounts in the first place! What makes you think they can pay the $35 overage charges?
I realize the ultimate responsibility for maintaining an individual's financial health and credit lies with the individual. However, it is not the bank's responsibility to gouge them and drive them further into a hole for ridiculous charges that should have been denied in the first place. After all, getting rejected by a Wal-Mart cashier is less embarrassing than filing for bankruptcy.