Why do banks charge a fee on "insufficient funds" when they know there?

Question

I think everybody needs to send letters to their banks insisting this is a stupid practice.... With computers doing all the work it's not like they need to charge because of extra work.....what do you think...and will you send such a note to your bank...I will and so is my friends and family.

They've cut out other fees/fines... this is old and should go too. If a person does it consistantly then sure go ahead but sometimes you make an error etc.

Answer 1

It is to "punish" people for writing checks that they know they can't cover.

Answer 2

This is a means by which banks develop revenue. Another practice is that of banks holding paycheck deposits for verification. Many individuals make deposits and believe that the amount is instantly available and write checks to this effect. If these checks are recieved by the bank before the bank clears your paycheck, then you will find yourself in overdraft and subject to those fees. Interest is another means by which banks profit. Also, did you know that once you invest your dollars in a bank account, the bank then profits from this capital by making investments with your money? This is way savings accounts generate interest to your benefit. However, the bank is benefiting from your savings MUCH MORE than you are.

Answer 3

Banks have to handle the processing of checks, whether they bounce or not. The OCC requires them to keep a ledger of balances, and the funds you have are a part of that balance.

You agree to let them charge you when you open an account. It's a part of the paperwork they give you. If you don't want to pay bounced check charges, don't write checks without having the money to cover the balance.

Answer 4

Banks charge fees because they make a profit from charging them.

Answer 5

it's a fee you agree to when you open the account.
this has been the case for many decades.
probably won't change. and it's still extra work to
program the computer to handle it...