80% of Debit Card Holders Don’t Want “Protection”

Most debit card fees come by way of “overdraft protection,” in which banks allow customers to spend more than what’s in their accounts—and then customers are smacked with fees of around $35 each time they do so. Here’s a real shocker: Very few people actually want that sort of protection.

News broke recently that many banks are changing how often they hit customers with debit card fees. One of the changes involves actually asking whether customers want overdraft protection in the first place. (Many banks automatically include it, and it’s up to the customer to specifically request that the “service” be removed.)

Now, by way of a NY Times editorial blasting debit card overdraft fees, comes a survey revealing that 8 in 10 people said that they’d prefer to go without overdraft protection. From the Times:

In general, cardholders are not notified that they have been charged $34 each for purchases as innocuous as a cup of coffee, a bottle of aspirin or a magazine until it is too late.

When asked in a national telephone survey, about 8 in 10 people said that they would rather the bank deny the transaction than charge them a fee. But banks typically do not inform people at the point of purchase that they are about to be overdrawn.

You can understand why the banks try to disguise these fees as “protection.” Banks make a killing off of them: $24 billion in 2008, a 35 percent increase from two years earlier.

Banks may even make more money from such fees this year, when, as the Washington Post reports, more and more people are growing more and more likely to use debit cards instead of credit cards.

Why the preference for debit cards? Because overusing a credit card can land you deep in debt. Overusing a debit card will “only” result in scads of fees, and instances in which you basically pay $37 for a $2 coffee. Guess this is the lesser of two evils.

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Debit Card Fees: Changed, But Still an Easy Way to Get Ripped Off

Debit Cards vs. Credit Cards: Do You Prefer Debt, Fees, or Both?

Done Deal: CBS Gives Green Light to Sitcom Based on Groupon

Daily deal giant Groupon is known for its peculiar sense of humor. There was the time the site “bought” April Fool’s Day. The introduction of marketing gimmicks like the creepy virtual discount wheel called “Clicky” can only be attributed to some offbeat sense of what’s amusing. And of course, from the beginning, subscribers have been reading Groupon’s trademark absurdist, careful-not-to-offend descriptions for deals arriving in their in-boxes. The fact that there’s a network sitcom in the works featuring Groupon is apparently no joke, however.

You’ll Be Able to Buy ‘Waterproof Sunblock’ This Summer, Even Though There’s No Such Thing

Last summer, the FDA announced new regulations affecting how sunscreens are marketed. Accordingly, sunscreen labels will no longer be allowed to feature the words “waterproof,” “sweatproof,” and “sunblock”—because no sunscreen is truly waterproof or sweatproof, and no lotion completely blocks the sun’s harmful rays. Originally, the changes were set to take effect this June. Now, though, it’s OK for stores to sell products making these dubious claims on through the hot months ahead.

http://cheapskate.blogs.time.com/2009/10/20/new-debit-card-overdraft-law-would-change-the-game-entirely/ New Debit Card Overdraft Law Would Change the Game Entirely – The Cheapskate Blog – TIME.com

[...] Banks sign them up automatically, and it's up to the customer to opt out. (When asked in a survey, 80% of people say they would not want such "protection.") Customers also may have no idea when they're overdrawing their accounts. They simply find out [...]
http://money.blogs.time.com/2010/01/28/how-battling-the-banks-and-credit-card-companies-is-like-whack-a-mole/ How Battling the Banks and Credit Card Companies Is Like Whack-A-Mole – It's Your Money – TIME.com

[...] matter how good the pitch, many customers are going to opt out, and the banks won't reap anywhere near the $38 billion or whatever obscene figure they made in [...]
http://money.blogs.time.com/2010/02/23/the-overdraft-campaign-banks-try-to-scare-customers-into-accepting-35-fees/ The Overdraft Campaign: Banks Try to Scare Customers into Accepting $35 Fees – It's Your Money – TIME.com

[...] overwhelming majority of bank customers don't want overdraft protection. According to one survey, 80% of debit card holders say they'd rather skip on the arrangement, in which banks allow customers to spend more money than [...]
http://money.blogs.time.com/2010/05/18/new-debit-card-credit-card-laws-will-save-consumers-5-billion-this-year/ New Debit Card, Credit Card Laws Will Save Consumers $5 Billion This Year – It's Your Money – TIME.com

[...] The bigger problem is that, until now, most banks automatically signed up customers with overdraft protection without every asking anyone. And as Barney Frank put it, banks shouldn't be doing people such "favors" without asking them. So the significant change is that now, customers will have to be asked if they want overdraft protection—and most don't. In one survey, 80% of debit card holders said they'd opt out of such "protection." [...]
http://auroralive.wordpress.com/2010/05/19/new-debit-card-credit-card-laws-will-save-consumers-5-billion-this-year/ New Debit Card, Credit Card Laws Will Save Consumers $5 Billion This Year « Aurora LIVE

[...] The bigger problem is that, until now, most banks automatically signed up customers with overdraft protection without every asking anyone. And as Barney Frank put it, banks shouldn’t be doing people such “favors” without asking them. So the significant change is that now, customers will have to be asked if they want overdraft protection—and most don’t. In one survey, 80% of debit card holders said they’d opt out of such “protection.” [...]
http://money.blogs.time.com/2010/06/15/be-afraid-be-very-afraid/ Why You Really Want to Avoid Payday Loans, Store-Affiliated Credit Cards, and Overdraft Fees – It's Your Money – TIME.com

[...] July 1, and the new opt-in system is expected to save consumers $5 billion this year. While many bank customers will choose to opt out of programs that charge them $35 fees each time they use a debit card but don't have funds to cover [...]
http://money.blogs.time.com/2011/03/07/what-happened-to-overdraft-outrage/ What Happened to Overdraft Outrage? – It's Your Money – TIME.com

[...] consumers seemed pretty agitated over overdraft fees, and understandably so. In one survey, 80% of debit card holders said they'd prefer such charges would be declined rather than get hit with a $35 fee each time a charge [...]
http://money.blogs.time.com/2011/04/27/a-bank-heist-committed-by-the-banks/ A Bank Heist, Committed by the Banks – It's Your Money – TIME.com

[...] many people would prefer that such a transaction would be declined, so long as no fee was assessed. 80% of debit card holders said they'd rather the card be declined to avoid the fee. Yet somehow, when laws passed mandating [...]