It’s not often that I give credit to Bank of America, but right now I’ve got to salute the giant monster mega-bank for letting the free market rule when it comes to overdraft transactions.
One of the worst rip-offs from big banks of all kinds over the years involved them approving debit card transactions when they know you have no money…just so they can hit you with $35 overdraft fees. It’s abusive beyond the pale.
Then new rules came about requiring banks to ask your permission before they could rip you off with those fees. In the wake of those rules, you had the banks working overtime to write cleverly worded letters to customers that tricked them into opting in so the banks could approve transactions at all times!
Bank of America, however, has gone its own way on this, not allowing overdrafts of your account since the new rules went into effect. They’ve been just straight up denying the transactions. But now they have a true and honest market-based solution.
Under the new plan, the nation’s biggest bank will text you saying they can’t approve your transaction. You then have the option to text them back and tell them to approve it, in which you’re on the hook for the $35 fee.
This lets consumers make the decision for their own lives. That’s true free market. It goes back to the people who I’ve had a battle with for years, the payday lenders. They’ve been banned in state after state for making loans to people at hundreds of percent interest. But my deal has been don’t ban them, just require them to post a 2×1 foot sign that says, “Today we’re lending you money at 512%” or whatever it is. I just want them to be upfront about their terrible loan terms instead of hiding them.
If we inform people in simple terms what it is they’re agreeing to and they still choose to do it, well, that’s the free market and I think that’s OK. So kudos to Bank of America for doing this in a straight-up, honest and forward way with its customers.