Earlier this month, new federal legislation regarding automatic overdraft coverage went into effect. Banks are still allowed to offer overdraft protection on checking and debit card accounts, but it can only be provided as an opt-in service. It’s no longer automatic or set up by default. As a result, banks are getting more and more aggressive get you to sign up. Why? Because automatic overdraft coverage nets the banking industry (literally) BILLIONS of dollars annually.
For the past few months, my bank has sent me countless paper notices to get me to sign up for automatic overdraft coverage. (So much for the “green” business practices, right? Perhaps the bank’s environmental concerns are not so important, after all. Or maybe they’ve just forgotten about the planet in their blind pursuit of more and more fees.) I shake my head and laugh when receiving each of these stupid notices and, of course, I recycle them.
No sooner did I become oblivious to banks (and the tidal wave of pleading ads about automatic overdraft coverage), when I noticed at least one bank now offering a $50 bonus for signing up. Yep, 50 bucks. M & T Bank — a regional bank serving the mid-Atlantic states — is actually paying people to opt into automatic overdraft coverage. The desperation has reached a new level of, well, desperation.
I must confess, this $50 bonus tactic is very smart and will probably fool many clueless account holders. M & T Bank may not be the first bank to gamble $50 on automatic overdraft coverage. Nevertheless, I expect that other banks will follow suit. Of course, my strong advice to you is a familiar refrain: JUST SAY NO! Don’t be fooled by the crisp bill with Ulysses S. Grant’s picture on the front. It’s a trick! Banks like M & T are simply betting that you’re more desperate than they are. Prove them wrong.
If you’re thinking you can take this bonus and outsmart the bank, think again. So-called bank account “bonuses” often never materialize. When customers are ignorant enough to take the bait, the bank will employ one of two scenarios: 1) they’ll refuse to add the bonus to the account or neglect to do so; or 2) they’ll flag the bonus accounts and figure out how to recoup it. Either way, you can count on the fact that automatic overdraft coverage always works in the bank’s favor. You can also count on overdraft fees in the future, if you’re exposed to automatic overdraft protection.
Just in case you need a reminder to say no, here’s a recent video from Consumer Reports about why you should decline automatic overdraft coverage.
Recent Comments