Bow down to your bank

One of the most notorious financial schemes that banks use to make money is charging punitive fees for “bounce loans.” The banks don’t look it at this strictly as a loan (though consumer groups are fighting to have them classified as such in order to make the institutions adhere to truth-in-lending guidelines, which even pawn shops must abide by when loaning money.) Instead, they see it as a “service” to the good customers who might come up short of funds when buying groceries with a debit card and would be glad to pony up 30 bucks for the privilege of overdrawing their account. Of course, if you happen to make a couple more stops after the grocery store, each successive purchase is another fee, and an innocent mistake can quickly become a bear of a debt.

According to a June 9, 2005 report by the Consumer Federation of America, 22 billion dollars in overdraft fees were charged by financial institutions in 2003, and non-sufficient funds charges accounted for 50-percent of consumer checking account revenue. These fee profits “exceed earnings from all other forms of bank lending, including mortgages and credit cards.” If you’re curious, here are some numbers to compare if you’re thinking it might be time to make a change.

Bank, overdraft fee per item, fee with overdraft protection

Bank of America $34* $10

Wells Fargo $33 $10

Umpqua Bank $32 $5

U.S. Bank $28-$31 $5

Washington Mutual $22-$30 $10

Premier West $25 $5

Tri-Counties Bank $22 $5

Sierra Central Credit Union $22 $3

Butte Community Bank $20 $3

Golden 1 Credit Union n/a† $3

*Before going to $34, B of A charges $19 for first two instances and $31 for third and fourth instances.

†Golden 1 does not pay for overdrafts on accounts without overdraft protection.