Washington Mutual . . . Legal Loan Sharks?
February 5, 2007 2:39am CST
With all the talk these days about Payday loans, banks have jumped on the band wagon touting the negative things about Payday loans. Yet if we pull back the curtains on the banking industry, are they really any better? Washington Mutual, yes, my former employer offers almost everyone who opens an account a $100 overdraft limit. If your checking account is handled well, it quickly increases to high amounts, ranging from $500-$1000 on average for the accounts I worked with. This simple 'overdraft limit' allowed a consumer to make one small error in their checkbook register and bounce multiple checks which were in turn paid by the bank. The sneaky part is they were paid into the negative up to the limit of that overdraft limit and charge a large fee for each item that was presented. Daily I viewed accounts that had been charged $100 or more in fees, and the customer wasn't aware of it for several more days until the notice arrived in their mail box. Is this any different than what a Payday Loan company charges? The main difference that I see is the consumer is aware of the fees up front! Not after the fact! I suspect if we did the math, these overdraft charges far exceed the calculated interest rate one a Payday loan.
• United States
11 Feb 07
Until this happens to you, you don't think much about it, but it is quite a shock when you are faced with a bunch of overdraft charges; especially when you didn't realize it was happening until more than one check was involved. I know a lot of people who try to keep track of their balance in their heads, thinking they will sit down one of these days and balance their checkbooks. Something always manages to slip past and get forgotten until that dreaded notice from the bank arrives. I really try to keep my checkbook up to date by entering debit purchases in it just as though I had written a check. It may take a couple of minutes extra, but it is well worth the effort and time.