26 March 2009

How to get back bank overdraft fees

There are two ways to view bank or credit card overdraft fees. The first is to hold the consumer strictly accountable using the principle "if you don't have the money, don't spend it."

The other viewpoint is to consider that credit card companies intentionally allow overdrafts in order to collect usurious amounts of fees. When a credit card is swiped by a teller, it would be simple for the computer to announce "insufficient funds" and refuse the transaction. Instead, the transaction is allowed to go through, and the credit card company "loans you the money" and charges an immense fee for a negligible loan for a brief period of time.

This video espouses the latter view and explains that if you protest the fees in small claims court, the credit card company may find it cheaper to cancel the fee (and pay your court cost) rather than to spend the time contesting the suit.

The latter maneuver could of course then be labelled "predatory litigation" by a corporation. It all depends on your point of view...

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