How Banking Practices Create Unemployment

According to Associated Press finance writers Eileen Aj Connelly, and Dave Carpenter of Associated Press (et. al September 30, 2011) “38.7 million people carry Bank of America debit cards. However, the recently instated $5.00 will apply to various services that are offered by Bank of America not just debit cards.” The problem with Bank of America’s new service charge is that it will adversely affect its’ disabled and elderly customers. Nearly $ 4.5 billion of unauthorized overdraft fees are taken from people who are heavily dependent on Social Security.  Debit cards are the most frequent overdraft trigger for individuals existing on fixed incomes.

Bank practices intentionally maximize overdrafts by automatically approving debit purchases, debiting the highest dollar amount first then artificially increasing the number of fees that can charge. Although Bank of America has stated that it will not charge an overdraft fee for a client those account is overdrawn by an amount less than $10.00 at the end of the business day; depending upon the number of items purchased by a customer, the taxes on 2 – 3 items purchased by a customers can collectively exceed the $10.00 limit easily without the customers knowledge. Thus; if a customer is engaged in regular shopping habits they could exceed the $10.00 limit by the end of a normal business week.

 

Since a number of individuals living on fixed incomes are either: PWAs (People living with AIDS), HIV positive or possess other disabilities that have black balled them from the job market such as RMIs (recurring mental illness, which requires medications to maintain their high level of functioning and stability), see NEI’s March 08 issue of Socio-Economic Corner with J.R. Allen; overdraft fees can eat away from 1/10 to 1/5 of their monthly income – from $100.00 – $200.00 dollars of their SSI, SSDI checks leaving them with $700.00 to $600.00 dollars per month for living expenses in a climate of rising taxes, high unemployment and credit biased employers. Overdrafts can actually affect your credit score which in turn can decrease your chances of being hired by an employer.

Thus; Bank of America’s increased service fees could actually prevent those on fixed incomes from obtaining employment due to unintentional poor banking practices. According to Elias Westnedge, eHow Contributor, “Over drafting your bank account puts your account into a delinquent status. If the overdraft is not reversed or paid off, your account will be closed and sent to collections. Although over drafting your account does not directly affect your credit score, if not quickly resolved, it can damage your credit history by showing up on your credit report as a collection account, thus lowering your credit rating significantly.” For those on fixed incomes, it one bad month can create a series of bad months in a row. In short, for an individual on a fixed income one bad month can lead to closed accounts, bad credits ratings and even greater difficulty in obtaining employment.