Ryan Cooper, a freelance writer, is convinced more than ever that the free market offers consumers the most choices: 

The decision haunted me as I read the online bank statement. A combination of holiday spending, personal property taxes and a recent job loss caused me to overdraw my checking account.

If I didn’t come up with $200 by 7 p.m., I would bounce four checks. Each bounced check fee was about $30, for a total of $120.

In addition, my bounce protection only covers up to $350. After that amount, each check keeps bouncing until paid.

I had two options. I could cover the difference by returning every Christmas gift and pawning valuables. Or I could borrow money from a payday loan business.

I chose the payday loan option. I didn’t want to punish my children for circumstances beyond their control.

The whole column is a good read.

What’s All This Fussing About? has an interesting (if lengthy) diatribe against increasingly pervasive and arbitrary fees from banks and credit cards.  A taste:

Examing banks further; the fees we’re paying for accounts have nearly tripled in the past decade. Beyond the familiar maintenance fees and minimum balance fees, a NSF (nonsufficient funds) charge has reached $45, and bounced check fees now average $30.  ATM fees can be massive, and can be incurred from your own bank AND the ATM’s host bank.  Some ATM arrangements may charge you as much as a $10 fee for using an ATM more than three times a month. Fees for check “stop payment” are typically $25, and returned-deposit fees of up to $10 might accompany the many resulting bounced-check fees.  We have seen the institution of fees to talk to bank tellers face-to-face.  Cashier’s checks and money orders can now cost $10.  Payments by phone and copies of old checks can now incur significant fees. You may also see fees with some banks for the privilege of enjoying online banking services. And while you will probably be able to select a rush payment option for Bill paying, it can come at a price from $5-$15. Paying for retail purchases with a PIN card may incur additional fees.  Customers may be charged a $6 monthly fee for not having direct deposit. Wow. Be glad too, because there appears to be no cap for these fees, so maybe we should consider them low.

In addition to your significant overdraft fee (should you accidentally top your balance), you could see a cascade of these charges where you did not expect it.  That’s because banks are allowed to change the order in which the checks clear.  Read that sentence again, if you didn’t fully absorb it.  This could cause you to bounce numerous checks as opposed to one, in certain routine situations.

I’m not exactly sure what it means, but Bloomberg is reporting that a U.K. court has “ruled today that overdraft fees are subject to laws regulating unfair terms in consumer contracts.”

The Payday Pundit loved this story.  One 19-year old bank customer is highighted: 

He accidentally overstepped his overdraft in January by £25 and he calculates the penalties and interest so far incurred from being pushed further and further into debt now total £292.66.

He said: ‘I have paid the fees back twice, once borrowing money from my mother as well as using my full wage to pay it back the following month. This has left me penniless and yet the charges still keep coming.

The High Court will be ruling soon on whether overdraft protection fees constitute violations under Britain’s Fair Trade laws.   

The payday lending industry exists in part because consumers are trying to avoid bounced check fees and costly overdraft protection charges.    

BTW, the average overdraft protection fee in the United Kingdom is $57. 

CBS MarketWatch offers 6 tips to avoid overdraft fees.

“If you have been on the receiving end of this practice, you know that a single $5 transaction can trigger a $30 to $35 overdraft fee, while a series of overdraft purchases in a single day can rack up hundreds of dollars in fees. The people most at risk are consumers who routinely have low balances or who don’t monitor their account balances regularly.

This just goes to show why reasonable consumers choose to use payday loans to avoid overdraft fees.  Especially considering that the fee for a payday loan is typically $15-$17 per $100.

According to this story, one bounced check led to $3000 in overdraft fees. Where are Center for Responsible Lending and nanny-state lawmakers?  Shouldn’t they be holding hearings, calling for rate caps?   

A new documentary takes at look at overdraft and bounced check charges. 

According to Bankrate.com, the average NSF fee is now $28.23 and the average overdraft protection fee is $29.00. 

Knowing that those fees hit whether the overdraft is for $3 or $300 and that the fee for a payday loan is typically $15-$17 per $100…it becomes very clear why payday loans are used by customers to avoid bounced check and overdraft fees.