Bank customers used to be automatically enrolled in overdraft programs, which “protect” the customer by covering debit card expenses even if it exceeds the account balance. The fee for this protection—which only protects the customer from having his card rejected—is about $35 for each and every transaction. As of August 15, however, customers aren’t automatically given such humiliation-avoiding, fee-charging protection. Since that date, customers must be asked and officially opt in before they’re enrolled in a service that could save them some face while siphoning substantial fees. So how many customers have actually opted in?
That’s a good question.
In the days leading up to the opt-in deadline of August, the banks campaigned furiously to prod customers to opting for overdraft services for debit cards. In their opt-in campaigns, some banks chose to sub more customer-friendly phrases for overdraft protection—which is already a euphemism itself, in which fees translate as protection—such as “courtesy pay” or “debit card advance services.”
Early estimates said that about 30% of bank customers would opt in. A Consumer Reports poll published in mid-November indicated that the opt-in campaigns weren’t all that successful, however, and only 22% of customers had signed up for overdraft protection for their bank debit cards.
So that’s that, right? Nope. An American Bankers Association poll put the figure at more like 46% of customers opting in.
That sounds like a big disparity—22% versus 46%—until you take a look at a figures cited by the WSJ indicating that 75% of bank customers have agreed to pay a fee each time they overdraw their debit card accounts, so long as (the shame!) the card isn’t rejected.
Which figure is correct? You got me. One thing does seem clear, no matter which poll is consulted: The people who have a history of overdrafting (and paying fees) are the people who are most likely to opt in to overdraft protection (and continue paying fees). The CR poll states:
Of those consumers who signed up to have debit card or ATM transactions covered for a fee, the poll revealed that 55 percent had experienced an overdraft in the past six months.
The WSJ offers pretty similar data from a very different source:
J.P. Morgan Chase & Co. said earlier this month that, of those who frequently overdraw their accounts, 53% have chosen to sign up for the service.
If this is the case, the banks should be happy: They’ve signed up and should continue to make money off of the irresponsible customers who are most likely to overdraw, while most of the people who have opted out are highly unlikely to overdraw, and so they probably wouldn’t be paying fees even if they’d opted in.