Most see through checking account overdraft ploy

Bank sign on building

Do any of these warnings sound familiar?

"Protect yourself from the inconvenience of declined transactions."

"We need to hear from you to keep your account operating smoothly."

"Your debit card may not work the same way anymore, even if you just made a deposit."

Did they scare you into opting into your bank's pricey overdraft protection plan?

A new survey by the Center for Responsible Lending finds that despite these misleading efforts by banks to bamboozle us into overdraft protection plans we don't need, most Americans saw through the smog and opted out anyway.

The Federal Reserve last year sought to crack down on widespread abuse in overdraft "protection" programs on checking accounts by requiring banks and credit unions to obtain our opt-in before charging debit card overdraft fees, rather than automatically enrolling us in the program.

While the banks have been high-fiving themselves over what they portray as public opt-in mania, the survey paints a far different -- and likely more accurate -- picture.

In a telephone survey of 916 adults who regularly use their checking accounts, the pollsters found that only a third of those polled opted in for overdraft protection.

Of those who did, most based their decision on two misconceptions: that they would be charged whether their debit card transaction was accepted or declined and that opting out might adversely affect their checking account. The truth is, a declined debit card costs you absolutely nothing, and the Fed's opt-in rules cover only debit and ATM transactions, not checking.

"These findings strongly suggest that an opt-in rate of 33% exaggerates interest in high-cost overdraft coverage for debit card transactions. Rather, the banks succeeded in confusing and wearing down some of their customers to the point that they accepted a product that would ultimately cost them unnecessary, exorbitant fees," the pollsters concluded.

"When it came to convincing customers to opt in to high-cost overdraft coverage, it was as if the banks rigged the election but still lost the vote."

Sorry episodes like this one make me wonder if banks will ever again attain the status of trusted adviser and partner in prosperity.

All they've managed to do with their latest disinformation campaign is earn yet again America's disgust and distrust.

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