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How Banks Are Getting Rich From Overdraft Fees

Banks have come to rely on fees for a big part of their overall income. But in their efforts to boost profits, big banks have also come under fire for their fee-raising practices.

In the following video, Fool contributor Dan Caplinger takes a look at a recent report from the Consumer Financial Protection Bureau detailing some of the most troubling practices governing checking-account overdraft fees. In particular, Dan discusses one controversial practice that some banks have finally started to change in their customers' favor. Dan concludes with guidance on how you can find out what your bank does with its fee practices and how you can cut the financial hit you take on your accounts.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 15, 2013, at 8:45 AM, RealityMan86 wrote:

    Here is a quick and dirty way to keep from getting overdraft fees charged to you. Opt out of the banks/CU overdraft plan. So what if your card gets rejected at a store. Good, because if you don't have it then you can't spend it! Besides in the event that your account still ends up with a negative balance such as the result of a draft, then they still don't charge you a fee. You're just in the red until you pay it back. Now if we could just get every person with a bank account in America to do this we could really stick it to these idiotic bank CEOs.

  • Report this Comment On June 15, 2013, at 9:34 AM, prchrmom wrote:

    I don't know what state RealityMan86 lives in, but here in NC the banks "overdraft" protection means the bank will cover a check or overcharge AND charge a fee for the privilege - you just don't "bounce" a check. If you don't have overdraft protection, they may cover the check and charge a hefty fee. No such thing as just being "in the red". My bank infuriates me because on the rare occasion when this has happened to me, they've called to tell me there wasn't enough money in the account and asked me to make it good. I did so, within the hour of getting the call, and they STILL charged me, even though they had the money the same business day. All this while they were sitting on a deposit that would hve ore than covered the charge

  • Report this Comment On June 16, 2013, at 11:53 AM, Teacherman1 wrote:

    A simple solution is to not spend more than you have in the account.

    JMO and worth exactly what I am charging for it.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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