Americans should be more aware of financing options

Everyone likes a good story. Let’s start with one.

Let’s say you have an account with a bank and you use debit cards to draw from that account once in a while. One day, you go out with your friends and have a nice dinner. You buy dinner, and use your debit card to pay for the purchase. While you don’t have enough money in your account, your bank covers you for the purchase but still charges you a draft fee because, well, you spent what wasn’t yours. Remembering this as the waiter walks away with your debit card, you fear he will come back and tell you it was rejected. But thanks to your bank’s policy, you are saved embarrassment for a $35 fee.

Well, after next July, this may not happen. A new rule by the Federal Reserve says that banks must notify customers before charging overdraft fees. Banks must also give customers the option of opting out of the program.

The most upsetting thing about this law is that it requires banks to give consumers something they may not want. Usually in a market, producers give consumers what they want. You would think that in an industry such as banking, wherein much competition exists, people wanting to option out of overdraft fees would be granted that choice by their banks.

Because banks don’t, we can only assume that customers are satisfied with the policy. This is because they either want to be covered in case they buy something and don’t have the money or they simply will be careful and not worry about overdrafting.

Consumer groups and regulators may argue that people are unaware that spending in excess of their accounts’ coffers is a no no. However, it’s seems very ridiculous that a person with a debit card would not know this very simple procedure. It only takes a reading of a contract, a call to the bank or talking to a teller to figure it out.

If the Federal Reserve, or even the federal government, does not think that we can protect ourselves from a simple overdraft fee, how far can they take other things? Maybe the American population is not even smart enough to buy a house without government oversight; maybe individuals aren’t aware enough to get married to the person they want or even to make a daily purchases without the watch of Uncle Sam.

We are nowhere near to a totalitarian state at all. I use the above examples to show the logic train that the new regulation follows.

As Americans, let’s try to depend less on government to tell us how to behave and instead learn to live with the consequences of our actions.

Michael Lauck is a broadcast journalism and economics major from Houston