Like many people who are or have ever been poor, I have plenty of stories about the costly and embarrassing ramifications of overdraft fees. Once, a $5 can of baby formula triggered a cascade of fees and penalties so substantial that it ended up costing me hundreds of dollars by the time I was finally able to get my account back in the positive.

Another time, I was thrilled to receive a $200 freelance payment in the mail and rushed to deposit it into my checking account — which at that point had a balance of around $3. In my excitement, I failed to realize that my bank would hold the check for three business days before it “cleared” and was officially credited. On my way home from the bank, I treated my kids to Happy Meals. The $10 transaction went through but sent my account into the negative, causing me to incur more than $100 in fees before I knew what had happened.

Low-income people suffer the consequences of overdraft fees more than those who are financially comfortable — by a huge margin. A study by the Consumer Financial Protection Bureau (CFPB) found that while only 9 percent of checking accounts are considered frequent overdrafters, they incur almost 80 percent of all overdraft fees. These fees, which typically run $35 or more, are often imposed in multiple per-transaction batches. Coupled with daily negative-balance fees, they disproportionately hit those who can least afford them. The CFPB study revealed that the typical frequent overdrafter has an average end-of-day balance of less than $350, compared with an average balance of more than $1,550 for customers who aren’t overdrafters.

Overdraft fees seem almost intentionally designed to keep the poor trapped in poverty. Once the cycle of overdraft fees begins — often initiating a rapid downward spiral of overlapping accumulating fees and daily charges — you’re trapped in a hole that is difficult, and expensive, to get out of. This seems especially cruel when you are already starting out with a huge financial disadvantage. According to the CFPB study, consumers who overdraft frequently have median credit scores of less than 600, and roughly 20 percent of frequent overdrafters do not have a credit score at all.

Banks aren’t exactly motivated to help these financially struggling consumers, though, when overdraft fees are a steady source of significant revenue. Banks charged customers more than $12 billion in overdraft and related fees last year, according to the FinHealth Spend Report 2021, produced by the Financial Health Network — and the bulk of those fees were incurred by people categorized as “Financially Coping” or “Financially Vulnerable.”

That FinHealth report found that 43 percent of vulnerable households with checking accounts reported having overdrafted in the past year and incurring a related fee, with 9.6 overdrafts on average. By contrast, just 5 percent of the “Financially Healthy” respondents had been charged an overdraft fee. Black households are 1.9 times more likely to have overdrafted than White households, while Latino households are 1.4 times more likely to have done so.

The worst — and, in my view, most indefensible — fees occur when the bank declines to cover the transaction that triggers the overdraft, yet imposes a charge anyway. Sometimes known as NSF (non-sufficient funds) fees, they often balloon because when a charge or a check is declined or returned, some businesses or financial institutions will automatically resubmit it at least once, meaning the customer gets hit with multiple charges for the same item even if they never take possession of it. Several financial institutions, including USAA Bank and Digital Federal Credit Union, have faced lawsuits related to the practice. Those who charge ordinary overdraft fees often justify them on the grounds that they’re effectively spotting you when you don’t have cash on hand. But in this case, institutions are charging a fee for doing literally nothing. Now the customer not only has an overdraft fee, but also must deal with the consequences of a bounced check or a declined payment on the part of the merchant or creditor, an experience that can involve other costs — material, social and psychological. I’ve often said this is like asking a friend if I can borrow $20, only to have him take $10 out of my wallet for turning down my request.

Overdraft fees are especially punishing when combined with other banking practices that almost seem intended to trip up customers who are struggling to keep their balance in the positive. For example, the local branch of a bank where I have an account is open only on weekdays from 9 a.m. to 3 p.m. If you make a deposit at the ATM in the lobby after 3 p.m. on a weekday or anytime on the weekend, it won’t be credited to your account until the next business day. Yet if I use my debit card for a purchase or have an automatic or recurring charge that hits during that time, the bank can take money out of my account instantly. Inevitably, that puts those living paycheck to paycheck — and those who get their paychecks on a Friday but can’t get to the bank until after they clock out — at a disadvantage, even if they technically have money to cover their expenses.

I understand that, like any business, banks are focused on making a profit. I don’t expect them to be altruistic entities going out of their way to help consumers avoid fees that are in essence a cash cow. I know most banks will never willingly stop imposing overdraft fees. I just wish they didn’t seem to enjoy it so much. I felt sick when I heard that a former CEO of TCF National Bank reportedly named his boat “Overdraft.” It struck me as a cruel symbol of how the extravagant pleasures of a few are extracted from the everyday pain of many others.

There have been small positive steps in this area. This summer, Ally Bank announced that it was doing away with overdraft fees completely, and Democratic lawmakers recently reintroduced legislation that would greatly limit banks’ ability to impose excessive overdraft fees.

I welcome these developments but am not optimistic that there will be a major change anytime soon. Even if things eventually improve, banking customers who are in precarious financial situations will continue to suffer in the meantime. Having grown up in a very poor family, I know that for many low-income people, just getting a bank account feels like a major accomplishment. Keeping it from falling into the negative, however, can often seem like an impossible task.

Twitter: @bobbidempsey