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BANKS RAISE PENALTY FEES FOR CLIENTS' OVERDRAFTS
As the economy weakens, banks are increasingly squeezing customers who overdraw their bank accounts.
For more than a year, Wachovia has been urging its employees not to refund too many overdraft fees because they "make up a big percentage of our revenue and is a HOT button among leadership;' according to an internal memo.
Bank of America and Washington Mutual, meanwhile, have jacked up their overdraft fees and made it easier for customers to be hit with multiple penalties.
The changes come as banks grapple with growing losses from bad mortgage loans. Over-draft fees have increasingly become a source of profit. Banks and credit unions collect about $17.5 billion in overdraft fees per year.
In 2007, Wachovia put in place a tool that tells employees how much they can refund to customers hit by overdraft fees. The bank, in memos, also tells employees to "sell" a debit card with every account because it makes money when consumers use it.
In April, Washington Mutual raised its overdraft fee in most states to $34 from $32. Also this year, the bank increased the number of times a day that a customer can be hit with this fee, from five to seven.
This year, Bank of America raised the fee charged on the first day a customer overdraws to $25 from $20. The bank also raised the number of times a customer can be hit with this fee per day to seven from five.
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