Do banks need debit cards more than you do?


This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Charging $35 a pop to cover balance-busting debit card charges has been a rich business for banks.

But new regulations have banned the financial industry from collecting those fees -- unless customers expressly request the service. Post-financial-crisis revisions to bank rules also are about to cut sharply into the industry’s revenue from charging merchants to have debit transactions processed, as The Times examines in a story today.


Naturally, the banks have been doing everything they can to claw back their disappearing funds.

In one instance, Wells Fargo & Co. has been issuing report cards so managers can compare how branches are doing at signing up customers for the debit overdraft service. They can see at a glance every Wells Fargo office from Apple Valley to Ventura.

One comprehensive report from Wells Fargo showed that as of March 18, Rancho Cucamonga’s Victoria Gardens branch had persuaded 67.65% of new checking-account holders to opt in for overdraft protection. Arcadia’s main branch was at 78.74%. And 83.61% of new Rose Ranch customers in Oxnard signed on.

Then there were the laggards, the 10-page Debit Card Overdraft Service report said: Lakewood, 5.71%; South Pasadena, 4.62%; and Santa Monica Airport, 4.11%.

Emails obtained by The Times showed that at least one manager threatened to withhold prized tickets to L.A. Lakers, Clippers and Kings games -– Wells Fargo has a suite at Staples Center -– from workers who made too few debit card overdraft service sales calls.

The bank’s regional president for L.A. says the email was at odds with Wells Fargo’s policies, which are for employees to consult with customers about all alternatives for debit overdraft protection. Those include less expensive options of linking the checking account to a credit card or a savings account as a backup.

Critics say Wells Fargo and other banks are pushing customers into something they don’t need; some advise not using debit cards at all and getting by with credit, since consumers are better protected from fraud when they use credit cards.

A Wells Fargo manager in the L.A. area said the bank does link savings accounts to checking accounts to protect depositors.

“But that’s not what we were supposed to be talking to the customers about,” the manager said, speaking on condition of anonymity for fear of retribution. “What we were supposed to sell was the debit card overdraft protection –- at $35 per occurrence.”

Branch managers would track each employee on a daily basis to see how many customers they spoke to about the overdraft protection and how successful they were at persuading them to sign up, the manager said.


Fed restricts overdraft fees on bank cards

Debit card fee limits hit a snag

Strategies for avoiding new bank fees

-- E. Scott Reckard