Even if you opt out, banks will get their overdraft fees
Filed under: Banks, Consumer Complaints
Last week, The New York Times had an insightful op-ed entitled "The Debit Card Trap." I know what they're saying. There are days I feel like my bank is a hunter, and I'm the witless animal who has just stepped into the snare trap.The latest possible trend in banking, and I use the word "possible," since I don't yet know if we can call this a trend: banks appear to be changing the way they return checks that bounce.
Again, I just have seen this at my bank, the name of which I'd love to mention, but then I keep picturing an identity thief reading this and having fun with that bit of information and attempting to somehow use that to their advantage, so I'll just say that I use one of the big, shiny, brand name banks. Why I still do use this big bank and haven't switched entirely to the smaller credit union that I also belong to is beyond my comprehension. Still, one of these days, they'll push me far enough, and I'm sure I will.
Anyway, I decided about a month or two ago to ask my bank to let me opt out of their overdraft protection program. I've read numerous times that these banks offer overdraft protection as a service. A few weeks ago, for instance, a spokesperson for a Washington, D.C.-based credit union, that has this "service" told USA Today that the overdraft program is a "safety net. We look at it as a tool just to assist [customers] as needed."
Riiight, and thanks so much. But in that spirit, I told my bank that I wanted out of their overdraft protection "service," and I was told that they couldn't help me there. If I'm going to use my debit card, I'm going to use their overdraft protection service. That was interesting to hear, but somehow not shocking.
So I asked about checks. I don't write many of them these days, but I write a few, and so I told them that if the funds weren't in my account, that they should send my check back to the store or wherever I wrote it for. It's not that I don't want a store to get their money -- but I don't want my financial institution taking advantage of the situation and body slamming me with a barrage of bank fees.
The assistant bank manager told me that they could help me out there and return checks if the funds weren't there to cover them. I said that would be just fine.
Well, clearly, it doesn't pay to be too cute with your bank. Earlier this week, as the clock struck midnight, and the day turned from Tuesday to Wednesday, my bank had money that had been direct deposited into my account -- for simplicity's sake, let's say it was $500 -- but, of course, they held that. And the bank computer (I'm told it's a computer) looked and saw that I had a check coming through -- for simplicity's sake, let's say, $200 -- but there wasn't the money to cover it.
Now, a reasonable bank or credit union would put my $500 into my account and then run the check through. I know from experience that my big, shiny bank won't do that. But I would have expected them to see that there wasn't enough money for the $200 check -- and to send the $200 check back to the store and give me a non-sufficient funds fee.
Instead, they ran the check through my account tot, collected several overdraft fees totaling over $200 -- and then they sent my check back, and of course, lodged on a non-sufficient funds fee, worth $37.50, on top of that.
Then they dumped my $500 into my account, minus all of those fees, of course, which pretty much meant I was left with next to nothing.
When I surveyed the damage in the morning, I was livid, of course. Later, I spoke to my bank manager, who I kind of feel sorry for. She seems like a lovely person, and I'm sure it's not fun for here to be on the receiving end of customer anger. So I kept it pretty cool, making it clear I was upset without berating her, and we talked for about 20 minutes. In the end, I was able to get two fees wiped off the slate, but I was still left with five, including the non-sufficient fund.
But what I found interesting was that this bank has only been running the checks through, collecting overdraft fees and then sending them back for about a week now. It's a new policy, she told me, and supposedly I was sent this information in the mail. Maybe, although I have absolutely no memory of seeing it. In any case, I stopped by my bank and picked up a "deposit account agreement," a 54-page booklet that she said was just printed and saw nothing that indicated this new rule.
The New York Times Op-Ed that just ran stated, "Federal regulators who stood idly by while this system evolved are considering new overdraft rules that could provide more transparency. If they do not move quickly and aggressively to protect consumers, Congress should step in."
I would second that, and if Congress ever does decide to hold hearings and wants to hear from disgruntled bank customers, I'd be happy to volunteer. And in that case, believe me, I would be more than happy to reveal the name of my bank.
Geoff Williams is a regular contributor to WalletPop. He also is the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).
Money Clips
- HILARIOUS: Warren Buffet Plays Axl Rose in New Commercial - Huffington Post
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Reader Comments (Page 1 of 1)
8-23-2009 @ 5:49PM
alysha said...
Thank you for bringing this to light regarding how several banks are ranking in money by charging their customers fees on overdraft items that the bank could have process in a manner where it did not cost the customer enormous fees. I too have been a victim of the very same thing, your available balance reads one way and then you are zap a fee for something that is already counted in pending charges. Now I am a firm believer that if you are willfully writing check or using your debit card for things you do not have funds to cover, than yes you should be charge. However, when you have a regular direct deposit and charges pending, the bank should always process the charges in a manner that does not leave their customers with fees. I got stuck with NSF fee amounting to $730.00 from PNC (and I don’t care yes I mention them) that I am still paying for over one check item that was process before my direct deposit hit. Even though I made deposits to bring my account current, the effect just snowballed because the computer system did not honor my online transfers during their regular hours of operations. I have since closed my accounts with them. Yes, congress should step in to keep these banks from these practices.
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8-25-2009 @ 12:24PM
Steven O said...
Hello all
Here is a little insider secret, I worked for a big shiny-bank for approximately 5 years, if you are going to continue with these banks do your self a favor and become friends with a Lead Teller or Service manager, little known fact is that most if not all of these people have daily limits which allows them to reverse charges based on factual information handed or presented to them. for example my limit was $1000 a day, not that I ever reversed close to that. But telephone bankers or service reps have considerably lower limits, based on the fact that they can not visually be presented with any kind of proof or errors. the Official reasons that allow reversals are fraud and/or bank error, if it not one of these reasons it is difficult to recoup any money. Furthermore, be aware checks are not checks anymore, unless given to an individual checks are processed much like debit transactions, meaning they are taken almost immediately at time of purchase, whereas one used to have a nice 3 day period before some checks would finally show deducted from accounts, I bet this gets a lot of older folks into trouble. utilize online banking tools and keep a nice running transaction book, note when direct deposits come in and when payments come out, and remember if all else fails and you know something is going to hit your account and cause a lot of fees, call customer service and place a stop payment, which can be applied to amounts, it only costs $20 last time I processed one and it might just save you hundreds.
8-23-2009 @ 10:38PM
Jeff said...
When I was 16 working minimum wage a pizza shop accidentally charged me $90.00 instead of $9.00 for a cheese steak and fries. There was no manager present to void the transaction, so the cashier gave me $81 in cash. Wachovia charged me $300 in overdraft fees due to PayPal transactions set to go through. The pizza shop verified it was a mistake on their part. Had the $81 in cash been there, these overdrafts wouldn't have happened.
My Wachovia closed at 2pm, yes, that's right, 2pm. That was the latest they were open. School let out at 2:30, and I had just been in a serious car accident, where my entire side was purple and I had a broken rib and was badly bruised.
So since I can't possibly make it there in time I called customer service who assured me if I went to my branch they'd fix the error and give me my money back.
When I got to the branch Wachovia didn't do anything to help me. I showed them a photo of my totaled car and lifted up my shirt to show my side which was completely purple and bruised. Even had it not been totalled, I can't leave high school to go to the bank!
There was no way I could have deposited the $81 back into my account. Also, it wasn't my fault to begin with. What really burned me up is customer service said they'd fix it, and then the bank manager wouldn't back up what customer service said even though I had the agents name.
... Long story short... Wachovia is a heartless bank, don't let the adverts fool you. It took me 60 hours on the clock to recuperate the funds they raped out of my account walking to work injured.
If you're young and you don't have a ton of cash, putting your money in an account at Wachovia is a lot like gambling (which is illegal) because they'll find a way to take it all and they don't think you have the brains to get it back.
For the record Wachovia, I shouldn't have been able to have a checking account without a cosigner and your account holder's agreement that allowed you to do this to me was null and void.
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8-24-2009 @ 12:40AM
scott said...
I hate banks. As far as i'm concerned they can all rot in hell. They don't lose money they will fee you to death in order to get back the money they have lost due to this mortgage fiasco. I found this site if anybody is going through a foreclosure and needs to write a hardship letter in order to get a loan modification. I'll use any help I can to get even with the banks
http://tinyurl.com/hardshipletter
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8-24-2009 @ 12:42AM
Steve said...
It's horrible what these banks do. My brother-in-law (RIP) was on disability for a mental condition. He would go to Kroger to buy his food and would write checks. He eventually messed up and overdrafted a check. Kroger sent the check to Chase. Chase would return (overdraft fee) to Kroger who would electronicly charge a return check fee and then re-submit the check back to Chase. Chase would then charge two more overdraft fees (returned check fee + another overdraft fee) and return the check again so Kroger would charge another overdraft fee on the overdraft fee.
What eventually happened was between Kroger and Chase, they wound up with all these charges waiting for his direct deposit. They wouldn't cut him off knowing the government check was going to show up the first of the month. THEY TOOK HIS ENTIRE DISABILITY CHECK FOR MONTHS!!!
He was a little crazy and always complained that the "government" was stealing his money. I never imagined what was really going on till his unexpected death and I had a chance to go through his financial records.
I expect if there were any justice in this universe, there are people that will rot in hell for this poor guy to go hungry and without because they stole his money. And it's still going on...
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8-25-2009 @ 7:48PM
Really?!?!?! said...
Sounds like you should have been for there while he was alive to help him. Why did you wait till he passed away to go through his bank statements. If you thought he was crazy what do you think total strangers at the banks thought?
Most of the times, if you have a rational conversations they will reverse duplicate charges from the same item being presented but you have to be able to articulate that.
Sounds like family is to blame as well
8-24-2009 @ 1:59AM
Alessandro Machi said...
I would guess that the bank in question is Chase Bank. I have been protesting against Chase Bank the past few months, uncovering all sort of intriguingly nasty stuff.
http://www.daily-protest.com
http://www.robotsagainstchase.com
http://www.bloggersagainstchase.com
I would suggest one thing about dealing with banks. Banks work best when there are no down to the wire issues.
Rip the idea out of your head of zero as being zero. Zero is really a couple hundred dollars of penalties waiting to happen.
Make 500 bucks be your zero. Always leave a buffer of what goes in versus what is taken out. If mailing payments, ALLOW A BUFFER OF TEN DAYS from the day you mail to the due date.
The key to dealing with a bank is to not have them notice you. You do that by keeping buffers in your account and paying your debts with them several days in advance.
Otherwise, you are in for grief.
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8-24-2009 @ 8:56AM
BD said...
All I can say is two words: Credit Union! Credit Union! Credit Union!
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8-24-2009 @ 9:20AM
tom price said...
a recent consumer report completed by a news reporter on channel 4 in washington dc reported the banks make than 17 Billion, yes billion with a B on overdrafts and do it knowingly. i had $600 dollars stolen from me from BB&T. you know Biggest Bank Of
Thieves. Yea BB&T Biggest Bank of Thieves. And you know what
I got back......Not one damn penny.
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8-24-2009 @ 10:20AM
Bill Giltner said...
I agree with BD: credit unions can be an improvement.
Since I signed up for Probity Checking, which charges zero OD fees ever, I've been very pleased. Check it out: probityfinancialservices.com
Bill
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8-24-2009 @ 10:57PM
Ellen said...
When visiting in CA, I used my ATM card for several purchases. My bank was located in SC. Being that ATM transactions ARE electronic, I thought that the money was taken from my account shortly thereafter using my card. Not so. As a result, I had $140 in overdraft fees. The balance on my receipts was incorrect the subsequent times that I used the card. When I called my customer service rep at Wachovia, he told me that it takes several days to do the transaction. Needless to say, I closed the account at Wachovia. Several months later, I received a collection note from an unknown company stating that Wachovia sold accounts to them and that I owed another $26. Needless to say, I opted to forget about big banks went to a credit union and got an Only1 visa cash card. I fill it once a month for $4.95 and that is a lot cheaper than the bank.
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8-24-2009 @ 11:00AM
Dennis M said...
As a credit union manager I know a little more than I would like to know about "courtesy pay" overdraft programs. We are a small (40 million) dollar institution in Michigan and have resisted implementation of any program that charges these onerous fees. However I know that banks and some credit unions have embraced these programs as make-up revenue streams for diminishing interest on loans. That still does not make it right to charge people these outlandish fees. An entire industry has been developed and a story line that suggests it is better to overdraft than bounce a check. In our case our NSF fee is 12 bucks and we dont have any plans to raise it. Rather than developing management strategies to economize it is easier to adopt revenue enhancing programs like this to improve revenue. I have even had examiners ask why we have not adopted a "courtesy pay" program.
Look even though we work hard at educating people on how to stay away from this stuff we find they generally are too lazy to make the change. Only by getting away from these institutions can consumers send a message that is lasting. At the same time make yourself a pain in the butt by complaining loudly and long about fees that are obviously too high and if no success leave them and find a credit union or community bank that is more consumer friendly.
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8-24-2009 @ 3:01PM
Darth Nader said...
One of my credit cards, probably all of them, has a continuing monthly charge of $2.25, that will continue forever, as long as I don't pay them entirely off. It occurred only because I used Western Union to send emergency to my son 1,400 miles from my home. It was something like $50 I sent him, using this credit card. The statement charge said something like "fee" with no explanation. I called to find out what it was. They said I would pay that till I die, unless I pay the credit card balance entirely off...then it would go away. OK, so that is the rule, but I fail to see the purpose for it. Why should they continue to charge for a transaction already completed and past any expense for them...other than THEY CAN. It is doubtless a fee the government has approved. They are all out to get us.
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8-25-2009 @ 7:53PM
Dont use more money then you have said...
Dont use more money then you have and you dont have any problems....
When i grew up, my parents taught me if i took something that wasnt mine it was stealing... So if you use more money then what you have and you didnt ask the bank for permission isnt that the same?
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8-27-2009 @ 4:40AM
MIKEC said...
I really think this is a legal scam the banks are using to get rich. I can't believe that Congress would alow this to go on in this country. While the people are struggling in this country to keep there heads above water with this economy. The banks are getting bailed out and the people still suffer
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8-29-2009 @ 7:19PM
Myrna Merkley said...
I am 67 years old and love the banking system we have, you have to realize that they are in the business of making money and so now they are digging down into the "rip off" area of banking. Tellers are fed up because they have to sell you different services and savings accounts. Most have a quota they have to produce each month and if they don't well, you might not get fired but you certaily get passed over for a raise or promotions. I hate to tell you that I probably spend 2 or 3 hours everyday on my online checking account and when I pay a bill (some on line and some checks) I write it down and if it don't show up or clear the account within 10 days I'm on the phone with the company first only to find out the big shinny banks are holding them back in hopes you will overdraw and then send them through - ahaaaaa! They know what they are doing and they are doing it on purpose, so when you call the company ask them when they sent the check through, then call the bank and ask where is the check??? Do this a few times and they know you are on to them. It pays to be one step ahead of them not behind them.
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9-14-2009 @ 5:22PM
HungrySeagull said...
One of my Credit Unions tried to opt us in automatically. We signed a paper saying we dont want any of that.
Then we opened a savings account, tied it to the checking account so that if checking runs dry, savings is ahead of the game.
We use that particular credit union strictly as a direct deposit payroll clearing service and cash out once a month and take it all home.
No credit, no debit, no nothing. Kinda hard for a credit union to impose any fees when there is only just the minimum keeping the account open with one transaction per month by teller.
The banks tried to get us by delaying auto drafts until quite a few accumulate until they hit us in one day with about a month's total bill pays. (About 1000.00) We keep three months worth in that checking.
Now they are delaying the auto deposits when payroll comes due by a day or two.
To make matters worse, our providers of electric and other vendors are accelerating their auto drafts of bills each month all the way to first day of each month just after midnight or.... pushing auto drafts back to the last day of the month.
With all these fun and games being played by FDIC banks and later by Credit unions, it really matters when you accumulate cash for two months at home and cash for three months ahead or more just for paying bills.
Again, no debit, credit or atm involved at all.
Im just waiting for the bank to charge us for the special teller they will have to assign to us to service our once a month visit.
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10-07-2009 @ 12:07PM
sweetp said...
Sounds like Bank of America - they are the worst!!!
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11-11-2009 @ 4:48AM
sparklingpinkgorilla said...
as far as to the person who said this is stealing- if I picked up a purse that I was told was mine and looked exactly like mine- I wouldn't technically be stealing, even though I was taking something that wasn't mine. It's kinda like this with the banks since they advertise to younger naive people that they can keep track of their purchases with online banking and by calling in to check balances. They tell you you have x amount of dollars even though it has pending transactions that aren't being shown and so you spend x amount of dollars thinking that's what you have. You aren't purposely saying- I'm going to spend this money even though I don't have it. An 18 year old boy I know has gotten hit with so many overdraft fees and the bank teller keeps telling him as long as he checks his balance from the phone, internet or at an atm then he will be fine. We all know this is not true since these banks do not do real time transactions- even though they have the technology! I have a bank account with Chase who is (knock on wood) fairly decent compared to others I've experienced. I also have a Walmart Greendot card. Both have a direct deposit going on it. The greendot card cost me nothing since I put $1000 or more on it per month and gives me real time transactions. If I go to the grocery store and spend $50, I check my balance and $50 has been spent. I can not overdraft and I always know how much money I have. The only exception to this is gas, but just don't pay at the pump and it's no big deal. I hate Walmart and everything they stand for BUT this card is amazing and I prefer it over my bank account and would recommend it to anyone. Of course these cards have limits and you can only have so many thousands on it at once but if you've got that kind of cash you're not worried about overdrafts in the first place huh?
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