Local Bankers, Pro and Con

Today I had two quite different experiences regarding our local banks. 

On the bright side:

This morning, in a message on my office phone,  the senior vice-president in charge of small business loans at a bank based in a neighboring town told me that he would be able to spend a good part of an upcoming Saturday afternoon speaking to my New Ventures and Entrepreneurship class about the importance of a sound business plan, and about the services that a bank can provide to a new business.  That is most generous of him, and I am grateful. He did so also last spring, and the students very much enjoyed his contributions.

In contrast:

Later today, an MBA student here at Plymouth showed me that a different local bank where she has her checking account and debit card had charged her $30.00 for overdrawing her account by about $16.00.  The overdraft occurred while on spring break in the South, six days ago, and her University payroll deposit of about two hundred dollars will go into the account tomorrow morning.  So, the effect of this "overdraft protection" which is written into her contract is that the bank has loaned her $16.00 for one week, and has charged her $30.00 for the money.  Let's do the math.  What is the effective interest rate she was charged on that loan?  Well, if it is simple interest (close enough to make the point), the interest charged is 30/16 = 187% of the loan, for a period of one week.  Annualized, that comes to 52 * 187% =  9750% interest.  Some might call that usurious, but what do they know? 

I am sure that the bank in question will state that the charge was not interest on a loan, but a contractual and agreed-upon penalty charge for its covering an unsupported debit rather than rejecting it, and that their client signed an agreement to that effect when the account was opened.  But their client, in this case, is a foreign student, who opened the account within a week of arriving for the first time in America.  I hardly think that she has been fairly treated.  I am especially upset because I have had my Plymouth bank accounts with this bank since 1973, and it was I who recommended the bank to my student.

I applaud this MBA student for bringing this situation to my attention.

Tomorrow morning, I will visit "my bank," where I expect that they will make this situation right, and reverse all or most of that penalty.  If they do not, then I shall, after having banked for almost forty years there, take my business from them, and to the bank of the gentleman "on the bright side," as described above.  I will then be free to name this institution, both here and in a letter to the editors of the local paper, and of the Manchester Union Leader.