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Wal-Mart banks, overdraft protection, and customer rationality

Wal-Mart banks, overdraft protection, and customer rationality

The Wall Street Journal includes a story that is fascinating the leading page in regards to the operations of banking institutions found inside Wal-Mart— while not actually for the reason that the reporters believe that it is interesting. The writers believe that it is interesting as exposing nefarious practices by these banks, which generate large overdraft protection fees and (it is implied) exploit consumers because they see it. In reality, the story that is real precisely the opposite–it is compelling proof just just how consumers utilize alternative credit items, and We suspect, compelling proof the unintended effects of federal government legislation of credit rating services and products. See upgrade below.

In a write-up that previous Comptroller for the Currency Robert Clarke and I also published within the autumn, we talked about at length exactly just how customers utilize bank overdraft protection and lending that is payday your competitors between your two services and products. In specific, we keep in mind that available proof highly implies that in selecting involving the two services and products, customers generally choose rationally. First, those that make use of these items (like all alternative borrowing products) are individuals who don’t possess credit cards or would meet or exceed their credit limitations on the bank cards and trigger high charges. Continue reading