Are Overdraft Fees Really Just Loans Charging 17,000 Percent Interest?

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Submitted By rcrayton1
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Pages 2
Are Overdraft Fees Really Just Loans Charging 17,000 Percent Interest?

Reco Crayton

This article is presented to the general public
Introduction
Consumers whose checking accounts are running low generally have two options: Don’t pay for anything using the depleted account, or get a short-term cash infusion from the bank in the form of an overdraft loan. The price, of course, is the associated fee.
Thesis Statement
The study found that when people overdraw their accounts with a debit card, they typically are short 61.3 percent of the transaction. That means the amount they “borrow” is actually more like $14.71, which in turn would be more like a 28,121 percent APR. I. Overdraft fees on debit cards are for smaller buys II. Distribution of negative balance episodes III. Overdraft fees make up the biggest cost of checking

Conclusion the Consumer Bankers Association said the services “are completely optional” and provide an alternative to other short-term credit providers “outside the heavily regulated banking system,” such as payday lenders.
Visual Explanation

References
Bruce, Laura.(n.d.) FDIC Study: Outrageous Overdraft Fees. Retrieved from Bankrate website.http://www.bankrate.com/finance/investing/fdic-study-outrageous-overdraft-fees-1.aspx
Weis, Karen. (2014). Are Overdraft Fees Really Just Loans Charging 17000 Percent Interest. Businessweek. Retrieved from http://www.businessweek.com/articles/2014-08-01/are-overdraft-fees-really-just-loans-charging-17-000-percent-interest#r=nav-r-story
NerdWallettFinance. (2013) Overdraft Fees: A Guide to What Banks Charge. Retrieved from…...

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