Banks can’t seem to quit charging overdraft fees

Of all the many fees that banks charge, the overdraft fee may be the most perverse. And the most infuriating.

Overdraft services began decades ago as a courtesy by banks to their customers: If you didn’t have enough money in your account to cover a check, your bank stepped up, saving you the hassle and embarrassment of bouncing it.

Now that debit cards and recurring payments are increasingly popular, overdrafts can multiply as quickly as Gremlins in a swimming pool. One overdraft — a large rent check clearing, for example — can lead to many others. And it may be days before you realize you’re triggering a $35 fee every time you pull out your debit card.

That fee of $30 or $35 might not seem like much, but the Consumer Financial Protection Bureau estimates that the median debit card purchase triggering an overdraft is $24. In other words, the typical debit overdraft is essentially a loan with an interest rate that, in annual terms, measures in the thousands of percentage points.

Finally, most overdraft fees are entirely avoidable. Banks don’t need to offer the protection of paying them on debit and ATM transactions. They could simply decline a transaction if there isn’t enough money to pay it. Moreover, consumers don’t have to sign up for services that supposedly protect them from overdrafts.