Banks Can Manipulate Your Transactions, Then Charge You 1750% Overdraft Fee

By Will Chen. Last updated 5 July 2011. 155 comments

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When Jeff Ledford overdrew $10 from his checking account, Bank of America charged him five separate overdraft fees totaling $175.

That's a 1750% interest for going over $10. (Jeff is unemployed, by the way.)

Your Bank's Dirty Trick

Jeff got screwed because his bank dealt with his charges out of order, processing the largest transaction first.

This common practice allows banks to deplete your account faster, thus making it easier for them to charge you unnecessary penalties.

This was not a one-time mistake or the stupid policy of a single bank. This is the industry standard. No wonder banks are set to make a record $38.5 billion in overdraft fees this year. (See also: Debit Cards vs. Credit Cards: Fees and Fraud Protection)

Your Accounting vs. Your Bank's Accounting

Most customers expect banks to take out money in chronological order like this:

Date Description Debit Fee Balance
10/1 Smoothies $5.00   $185.00
10/2 Gas Station $29.00   $156.00
10/3 Coffee Cafe $8.00   $148.00
10/4 Electronics $90.00   $ 58.00
10/5 Supermarket $105.00 $35 -$47.00

 

Since the overdraft happens on the last day, you would expect only one overdraft fee.

But that's not how your bank sees it. They've decided to process the largest transaction first:

What type of credit card are you interested in?
How much do you spend per month?
Do you carry a balance?
Date Description Debit Fee Balance
10/5 Supermarket $105.00   $85.00
10/4 Electronics $90.00 $35 -$ 5.00
10/2 Gas Station $29.00 $35 -$39.00
10/1 Smoothies $5.00 $35 -$44.00
10/3 Coffee Cafe $8.00 $35 -$52.00

 

Thanks to your bank's creative accounting they can now charge you four extra overdraft fees!

This Could Happen To You

This is a very common practice, reports CBS 13 News which broke this story.

When CBS asked bankers to respond, they justified this as a service they provide to their customers!

Rod Brown with the California Bankers Association says it's normal practice for banks to process charges from the largest to smallest.

 

He's quick to point out, there's no law that says they can't. When Kurtis asked him if he could see how the public would think the banking industry is manipulating charges to make the most profit, he said, "No I can't."

 

"Consumer research indicates that those larger transactions are of greater importance to the consumer," Brown said. "It might be a car payment. It might be a mortgage payment."

 

CBS asked Brown, "Shouldn't I, as a consumer, be able to determine which payments are most important first?"

 

Brown replied, "As a consumer what you can control is the fact you either have money in your account or you don't."

That's not entirely correct. We also have control over other things. We can take our money elsewhere, stop bailing out the banking industry, or support legislation that will reform overdraft policies.

I personally agree with CBS that the consumer, and not the banks, should decide which transactions are the most important.

What do you think readers? Are the banks acting in your best interest with their accounting rules?  Do you have an overdraft horror story?

If you're not familiar with all the traps your bank has set for you, check out Philip's excellent guide to avoiding unfair banking fees.

(Chart credit: BruinKid of Daily Kos and CBS 13.)

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture
Guest

There is actually a bill in Congress now to make this practice illegal.

Guest's picture

In the UK at the moment, there is a massive case ongoing between our Office of Fair Trading and 8 banks. Banks here were charing almost £40 for unaithorised overdrafts etc. In 2005 people started claiming them back and then the claims were suspended following a decision to take a test case to court. The High Court ruled that the OFT has the power to assess charges. Banks appealed. The Appeal Court ruled that the OFT does have the right. So the banks took it to the Supreme Court and their decision is due this week.

What is basically means is that, if the Supreme Court rules as the High Court and the Appeals Court did, the banks could end up repaying £10 billion.

Bank charges are a joke. They really are. What a way to hit the people who are most financially in need.

Guest's picture
caryn

I have had an account with Wells Fargo for many years. Over the past few years I have seen the manipulation of funds in and out of my account working in Wells Fargo favor! They have manipulated funds so that they can get more, NOW $35.00 OD charges. I called to complain and got this wise guy that kept telling me that he would not talk to me if I would not listen. I was trying to tell him that my deposit was there and they manipulated transactions in WF favor! He told me that they can do that and nothing was illegal about it! If I dared to disagree, he tells me he did not have to talk to me because I was not listening! (In other words if I did not agree with his explanation I was not listening) I am most disappointed about this...I do not think that legislation can come soon enough. This is absolute highway robbery! I am telling everyone that I know about this and considering moving all of my accounts! Wouldn't it be nice if they had to repay all of the manipulated OD charges with interest?

Guest's picture
Guest

My bank is infamous to me for Manipulating my transactions AFTER they have POSTED. Waited for me to go over, (which was only 6$ so I didn't get a fee) They took a transaction that went through on an earlier date and erased it to make it say it went through when I was over already. this to make me over 16 dollars and aquire a 35 dollar fee. I don't receive paper statements because they were useless only giving me my balance and a blank page. therefore, I can't prove that it in fact went through 6 days earlier! Is there anything we can do to help this bill pass??

Guest's picture
AndyM

The solution is simple. Don't use money that you don't have.

As with most things, a little personal accountability is in order.

Guest's picture
Guest

You must work for a bank to make a comment like that. I used to work for a bank and when I realized their policy on overdraft I was horrified and whenever someone called or came to me for help I placed the items in smallest to largest order and recalculated the charges. The thing about the "larger charges being more important" is that do you see that usually all the charges are being paid? So what difference does it make how they rank them if they are all getting paid by the bank anyway? Most banks will let you go $500 in the negative if you are a customer of theirs for a reasonable amount of time (6 months or more) with an avg. bal. of ~$300. They do this not for service but for profitability! I found another job ASAP because all they cared about was how they could sell more products to people who were already strapped for money. Best thing you can do is watch your account like a hawk, keep a small savings account that is linked for overdraft incase you do make a mistake and ignore the tellers when they offer you home equity loans and credit cards. Better yet, tell the managers of these places you will pull your account unless they stop acting like salespeole every time you come in. The tellers are tired of the practices too!

Guest's picture
Christi

Thank you AndyM for your so very wise advice on not using money you don't have. If only it were that simple. Don't you think that if it were that simple the banks wouldn't be making so much money on charging the overdraft fee's? Let me guess, you've never overdrawn before???? Yeah, right.

Guest's picture
Guest

Sorry we're not as perfect as you are. Just because someone goes in the negative on their account doesn't make them stupid or careless. Haven't you heard that we are in a recession and people are living paycheck to paycheck?

Guest's picture
joseph w

Such as when you deposit cash after close of busness and write a check from those funds even later and the check is withdrawn as same day business but the deposit is posted next day? Did I have the money? Not after four overdrafts no one at the bank could explain.

Guest's picture
Guest

What an ignorant statement to make. The United States has one of the highest poverty rates among industrialized countries. The cost of living is overwhelmingly higher than most can afford making minimum wage. Even with sacrifices, impoverished and lower, and sometimes middle class Americans can not always make ends meet. It seems to me that you're a victim of the fundamental attribution error.

Guest's picture
Rfalken

Banks have other tricks. Mysteriously deposits have 4:00pm posting cut-offs while charges continue posting until the entire day. They also seem to "true up" at the end of the day. I recently obtained a refund of 9 NSF fees because of our bank's peculiar rules. The bank issued a credit which did not post until after midnight (they did manage to post the day's charges before the credit; (even those that were charged after they issued the credit).

Then there's "THE CREDIT CARD HOLD GAME"... They play a game with credit card holds. It works in this way... I charge a credit card on Jan 10. The bank then places a hold on my account. On Jan 12, if the account is overdrawn; (because of an unexpected fee) they debit my account for money that was not paid out and won't be paid out until Jan 13. Then when I deposit funds into the account on Jan 12, the transaction clears (is paid) without issue the next day, but there is an NSF fee charge from the 11th. Nice!

The easiest way to avoid this is to not permit a credit card charge if there is not sufficient money in the linked account. But no, alas, at Wachovia Bank this simple limitation seems to be nearly impossible. (although they are able to handle all the other programming gymnastics to maximize the fees charged.)

Guest's picture
Guest

That would be utopia, but how do you do that when banks are not processing as transactions as they come through.
there for it throws my check book off.
ITS A CRIME!!!

Guest's picture
Guest

Hmmm.... maybe one day when you overdraw ACCIDENTALLY you will understand. But oh wait... You're so high and mighty, I bet you'd never do that!

Guest's picture
Bank Hater

I'm all for personal accountablility, If I made the mistake of overdrafting my account, I accept the responsibility of paying the overdraft fee. However in my case I only overdrafted once, meaning I pay a single charge of $35.00 I have no problem with that, none at all. Most people shouldn't either, However what I do have a problem with is that in that very same case, they manipulated the transactions so that I ended up paying 7 $35.00 overdrafts instead of 1. This I have a very big problem with. I simply want them to charge in the order received, as I check my bank account every day to make sure there is money in there before using the money, and even keeping mental notes of things already purchased that havent posted yet. Trust me in that they make it very difficult to keep track of your money. The other people like yourself say we should keep a ledger.. lol if thats the case why dont we dump the debit cards and go back to checks and the writing system. How do you introduce new technology for our convenience and then ask us to still bank in the old ways when they screw us with their technology. Doesn't make much sense for the consumer.

Guest's picture
Guest

It really is that simple. I just got charged my first overdraft fee... I mismanaged an account transfer while making a large purchase. Transferred the amount to my savings then realized it was being pulled from checking. Wachovia charged me 10$ for the overdraft protection. Guess what? I would've been charged 4x that from the other bank for insufficient funds when they went to pull the money. Next time I won't be careless with the transfer.

It really is that simple. Don't spend money you don't have. I don't understand why its that hard. Don't write a check you currently don't have funds for. Balance your checkbook. Don't use a debit card if you don't have the money. People whining about the recession, its no excuse. That's why we're in a recession. My neighbor lost his job, whines about cash, but won't sell his Porsche. Welcome to America.

Guest's picture
Guest

LMAO!! I am a former bank manager and we were trained to say what you just said. We were told that if we made the customer feel embarrassed by our ridiculous tactics, they would let it go. And though it was legal, it was morally and ethically repulsive.

Guest's picture
Lisa

Are you kidding me? You think it's okay for a bank to manipulate your funds and overdraft people? Ridiculous!

Guest's picture
Lisa

Personal accountability - yes. What about corporate accountability too? When banks GET to keep all of our collective money (people, never forget that you are doing them a service as they get to earn interest and benefit from holding all the funds of a huge population of consumers) and they set all the rules in motion to maximize their ability to charge NSF fees in excess of $34 on charges as small as 80 cents: they order transactions to maximize the effect, they hold deposits and have cut off times for deposits while rushing debits and allowing those to continue posting unfettered 24 hours a day. In reality, they have made all the rules, put the game in motion with the traps set, now they are just meerly lying in wait for one of us to trip. The whole scheme is engineered to benefit those who are holding OUR money. THEN, they directly debit their fees - every other vendor I know of gets to invoice their fees. THEN, if the fees they debit take you further into NSF they keep to keep on charging you NSFs on subsequent transactions...snowballing and maximizing their ill gained profits. All this while engaged in seducive marketing tactics to get the average American into the insanley profitable trap of CONSUMER DEBT so they can ultimately end up charging you a monthly fee/amount for the remainder of your life...Again, all the while asking from Congress for these SAME tax payers they are fleecing to fut the bill for multi-billion dollar bails outs...AGAIN, all the while their CEOs and CFOs get multi-million dollar bonuses for profits they "earned" jacking the average American for millions of dollars in unfair/unethical fees and tax-payer funded bail outs...YES, a conversation on accountability IS in order.

Guest's picture
Guest

you answer is a preconceived notion that makes it sound like you are not even reading the posts. these bank are manipulating transactions to cause you to overdraft when you are not even spending past yoru means. how would you like it if you checked your online statement and it said you had $50 so you go to the store and spend $40 then next day you are hit with and overdraft because you actuallly didnt have $50 you had $30 and went over $10, but i guess thats your own fault for believing online statements, they are so inaccuarate...... if you are going to offer me a service i.e. debit card have a method of keeping accurate records. i literaly have to balance my debit card like a check book. i dont want a debit card i want cash money but beings employers are going to debit cards also you are kind of stuck between a rock and a hard place. i had my bank do this to me several times before i knew what was going on so i canceled my direct deposit and went back to paycheck and guess what no finacial trouble"because i am not irresponsible with my money" so when my job switched to debit cards i decided to give my same bank a second try and guess what? they did the same exact thing to me right off the bat and beings i had only made two purchases i was able to see that they manipulated my balance. we are pretty much living our lives by the banks terms, and that my freind i dont think anyone wants.

Guest's picture
Guest

It's not that easy all the time. I once transferred money into my account that morning before work. Then I bought lunch that afternoon. My bank processed my lunch before they processed the transfer. How is that my fault and how am I not showing personal accountability??? Why would the bank not process the transfer first? That's kinda important to me. Instead, they overdraw my account first and charge me $35 for it.

Guest's picture
yogi

Been there, done that, lost my t-shirt.

btw, hmmm people make mistakes, don't be self rightous.

Will Chen's picture
Will Chen

Guest1, thanks for the suggestion.  I've added a link in the main post to the legislation.

AndyM, of course that is the ultimate solution to most financial problems.  Do you think the punishment fits the crime in this case?

Yogi, I'm sorry to hear you also had a bad experience.  Would love to hear more about it if it's not too personal.

Guest's picture
aoi neko

They make $38.5 billion this year from overdraft fees alone this year, of course it benefits them. Of course they are going to lie about it. Just another way they have been screwing over their customers.

Funny it's our money but we can't chose how it's handled when it's in these accounts. I personally have not had a bank account for 20 years. I've heard too many problems where they do this and also don't credit deposits for up to a week hoping to create overdrawn accounts.

Honestly all this plus the bad loans and adding hidden fees on loans, someone should be going to jail. At least there is legislation that hopefully will go through and hopefully keep some of this from happening. Somehow though I think banks will just get sneaker with manipulating our money.

Guest's picture

I have been screwed by BofA so many times. I call each time and they give me lame stories about how things get processed late and stuff. Even if I have proof otherwise they say there is nothing they can do.

Luckily, July 1st is gonna be a good day for consumers seeing as how the Fed is making banks let customers opt-out of overdraft charges.

Fed Press Release

Still, I think banks should treat overdraft as a loan instead of fees. How about letting me just pay back what went negative with a reasonable interest rate? Is that really too much to ask for?

Guest's picture
Wendy M.

I TOTALLY agree with you. I can't stand Bank of America. I have had an account with them for years and have had nothing but headaches with them. Through the years, they must have gotten thousands of dollars from my husband and I. Recently, we made our 2nd home modification payment with Wells Fargo and Bank of America pulled their garbage and rearranged my transactions. They sent my mortgage payment back to Wells Fargo several times and each time I got hit $35 for it coming in and $35 for it coming out. Now, we may get kicked out of the Making Home Affordable Program because of Bank of America. In the past, they have at least covered my mortgage payment--not this time. They are ruthless! Every bit of money we made went into the account to try to get it in the positive. The last time I added up all of the fees over about a month, it was at about $700; I stopped counting after that as it just kept escalating. Eventually, the account was in the positive so my husband went down and withdrew what was in there and went in to complain to the manager. They said they couldn't do anything like freeze the account--then he caught on and said, "I CAN close my account now because it is in the positive." So, we closed the account after far too many years of abuse and being robbed by Bank of America. Here is a message that I have on my blog regarding the whole banking industry in general: http://homeschoolblogger.com/divineinspirations/664480/

Wendy M.

Guest's picture
Carolyn

My Fiancé's step mother works for BofA and even she hates their practices- they are one of the worst!

Guest's picture
ohwolfman

It's happened to me several times, with a twist.

If I know that I'm running low on funds, I'll drop some cash in the ATM. However, my bank (US Bank) doesn't process that transaction citing that I might be fraudulently depositing funds or that the funds I'm depositing might not be a valid transaction (despite me depositing cash.)

So, the deposited funds don't get added to my account for 24-72 hours.

However, as soon as I swipe my ATM for a transaction, the bank has already debited that cash from my account. Despite there physically being enough money to cover it from my deposit, the bank does not recognize that cash. But it DOES recognize an attempted use of the ATM card.

I might add that in my years of being a US Bank customer, I have never fraudulently deposited funds to make the account seem inflated (e.g. depositing $50, but keying in $500.)

When asked about it, US Bank shrugs and gives me a big "meh."

Guest's picture
Hack

usbank will do this to you. I have not overdrafted in a while or frequently, but when i do they ALWAYS re-arrange the order of the purchases as exactly described in the article. So I called them and we had it out. I told them that I know they are running a scam, and I am familiar how fractional reserve banking works. I.E. for every 1,000 I deposit they get to create 9,000 of federal reserve funny money out of thin air. So I I close my accounts they lose the fake money they get to leverage due to the private non governmental federal reserve banking system. Then the idiot on the phone tried to tell me it was my lunch on Friday that did it, which was AFTER I received my direct deposit from work. I said you do this again and it's going to the Attourney Generals office, if they don't stop you, then how about a commercial lien against your local branch office's real estate for the amount of fradulent charges I incurred?

They refunded all but one of the charges....

Since then all charges have been processed in the "correct" order.

Guest's picture
carolyn

YEP

I have Commerce Bank and I will deposit CASH and every once in a while, they will put it in there, so I can see it for 24 hours, then it will mysteriously disappear, and stuf goes through because I put money in, so I paid bills! They claim they "have no idea" how it happened, but I get charged anyway >:| crooked people!

Guest's picture
jon

when BAC and Citigroup, the banks that got government aid the most, won't refund you overdraft fees incurred in case of stolen debit card, just the stolen money. Prepare to lose $300 when your debit card gets stolen. It's as if they want people to keep using creditcards and "consumers".

Guest's picture

I agree with one of the other commenters.

This is just more motivation for us to have the least bit of personal accountability and know what we have in our account.

As easy as it is to check your balance now, this should be a no-brainer--especially when faced with the prospect of a 1700% fee.

Guest's picture
Guest

Sure, with some people, they just need to pay attention to what's in their account. But even being anal retentive about it sometimes doesn't help.

I started banking with Chase years ago. I have a checking account that I NEVER use my checks for, thus making it easier to know when everything goes through, and not risking that late-processed check. Chase allows you to text them to check your account balance, and last 5 transactions.

Now keep in mind, the first year and a half, every purchase I made, even gas at the pump, would go through immediately. I could text and get my present balance right away. If it worked any other way, then what would the point be of being able to text for your balance? Surely they wouldn't offer you something like that while fulling knowing that it wouldn't be accurate. For the first year and a half, I never had a problem going over.

Then, suddenly, I got 7 overdraft fees in one day. Each for $35. Having no idea what caused my bank account to be so grossly overdrawn, I called chase. They were seemingly ignorant of what could have possibly allowed me to get a text stating I had any amount of money, when I didn't.

I went in. I paid this ridiculous fee. I sat down with someone and we went over my account. Apparently when I paid at the pump (just $50), it for some reason, didn't go through right away. They claim the gas station will sometimes put transactions through late. So my account showed money where there wasn't. I use my debit card for everything, to avoid carrying cash. The next 7 transactions were minor (ie - bottle of soda), and still, my account showed money available. A few days after these minute charges, the charge from the gas station went through, and processed for the same day I got gas. Instead of being charged 35 one time, for the gas that went through latest, I was charged 35 for each transaction afterwards. When I questioned Chase, I got the cold shoulder.

I went to a Chase branch in a different city to see if perhaps they were friendlier there. I intended to close my account if things were no better. A lady there talked me into keeping my account and signing up for overdraft protection, saying I would get the paperwork in the mail within the week, and I had the protection.

Apparently not, because this happened AGAIN. I have asked Chase why they offer the texting option. They can NOT give me a straight answer. Mostly I hear simply, "I'm not sure why."

I have gotten a Visa gift card to see how it works (since Chase gives VISA debit cards). Apparently paying at the pump for gas goes through immediately with a gift card. No waiting a week. So if the Visa gift card can handle the transaction immediately, then why not a Visa debit card?

This apparently doesn't only happen with pay at the pump. I STOPPED using my card at the gas station all together, and only used it at stores I had never had a problem with going through immediately. Suddenly, after over 2 years of NEVER once having had an in store purchase go through late, the SAME THING happened. Still, no answers, no help, no anything except the demand for payment.

I am tired of being lied to and manipulated by Chase, and strongly discourage anyone from ever dealing with them.

Guest's picture
Margarita

Texting for your balance isn't being anal retentive. Gas stations typically charge a $1 hold to your card when your first swipe at the pump and usually take about 3 days to process the entire transaction. The reason that this doesn't happen with a Visa gift card is because they are processed as credit cards not as debit cards.

Restaurants charge the initial amount due to your card and a few days later the full amount with the tip added clears.

Hotels are usually the opposite and charge more than the amount due to your card initially and then once you check out without trashing their room the actual amount owed clears.

The easiest, most logical "anal" way to do this is to learn to balance your checkbook. When you make a purchase write it down in your register.

Nothing is free. I don't know anyone that gives money away for free why should a bank? If you don't have the money in your account, don't use it. It's as simple as that.

Guest's picture
Guest

I was a WAMU customer with overdraft protection linked to my "platinum savings account" which linked to my home equity line of credit and while I NEVER was overdrawn, we were totally over-draft protected.
With Chase's recent takeover of WAMU, apparently they changed the terms of our accounts. I received no notice of the changes to my overdraft protection.
I follow my expenses and balance closely. I budget expenses such as large bi-annual bills by saving the $ in my savings account, then transferring it to checking to cover the bill when I pay it. Without going into all the details of what happened, let's just say that Chase pulled a lot of these tricky tricks on me all at once, and deducted $200 in overdraft fees the same day I had checked my balance at 10PM to make sure it was all good.
They did this trick I read about in another post, where they posted purchases, including my property tax check, after midnight for the previous day. They did not credit my paycheck until after the purchases were pulled out (?!). None of these transactions showed up at 10pm but the next day they all appeared as if they'd been there all along. Dirty pool!

Is someone leading a civil action lawsuit against these evil banks? Their practices are so unethical, I don't understand people's posts here about this being the consumer's fault. Unless you spend more than you earn, you should be safe budgeting and balancing your account by viewing it online. The banks make their money off these fees, and it should be illegal. They hold our money and they are providing US a service, so why do they act as if it's US who owe them? Grrrr I just get so angry thinking about it. I definitely will change banks, but it's going to be tricky. With all the accounts there, I just need to be sure that I find a better bank before I go through the steps to move my money.

Guest's picture
Gaillynn

In 1995 my bank held a check for $6,800 and ALL my checks weeks later bounced and when I call them on it they said the check hadn't cleared.....Come on 2 weeks later??? No check even back then took 2 weeks to clear!!! When I got my bank statemnet it showed that it had cleared and that they took $ 600.00 in overdraft fees. NOW if it hadn't cleared where it they get the monies to take??? Get my meaning??? TRICKY TRICKY

Gaillynn

Guest's picture
Amy

I used to live paycheck to paycheck by a very thin margin, and I don't even know how many hundreds of dollars I lost because of this practice. Once, my overdraft fees ate half of my minimum wage paycheck. It also wasn't uncommon for me to see a negative account balance of close to $200.

This is after I would check my balance online to make sure that I had money in my account. Or deposit money at the counter to make sure it went in right away. But... like you said. They posted the deposit whenever they felt like it, often after creatively rearranging my transactions to cause up to 6 overdrafts at a time. This meant that my deposit just went into a giant hole.

And calling the bank was always an awful, awful experience that left me in tears. They would never reverse the charges because I had an overdraft within the past 6 months... because they posted my transactions out of order.

Thankfully, now I am no longer living paycheck to paycheck - and doing all of my banking with a local credit union. No banks for me, ever again.

Guest's picture
bubbles92399

CHASE made a small fortune off of me this way! I had no idea this was legal! This is insane! Before WAMU was CHASE I would go into the bank branch and make a deposit and the money would be credited right away so I didn't think that CHASE would be any different....CHASE charged me $198.00 on less than $50.00 worth of purchases after I had made a deposit in the branch by rearranging my transactions and not posting my deposit until midnight.

Guest's picture
a

I have not ever had this experience personally, but I still think it's wrong for banks to have this approach to customers. I'm switching to a credit union I just found. I'd rather support a credit union than a bank.

Guest's picture
Guest

Some credit unions also engage in this practice. Xceed for one.

Guest's picture
Guest

It really doesn't do much good to chekc the balance at Wells Fargo, I've checked the balance at 7:00 and it was about $45, I put in $200 cash at 8:00 when the window opened and still find it is overdrawn by overdraft fees by 11:00--they claim they can't remove fee and can't opt out- When I called and said I had seen in the paper (New York Times) that Wells was going to start allowing customers opt out of overdraft fees they said, "OMG, I didn't know that was public yet" They are still claiming they can not let customers opt out of overdraft fees!!!

Guest's picture
Guest

It sounds like it's in effect for new banking customers. However, existing customers have to wait until next Monday, August 15.

Guest's picture
Hrazdan

The same manner,frankly by Chase Bank pursued,despite the case,I am unemployed. Who cares?????!!!!!!!!!!!

Banks who their assets supported by Wall-Street,a soviet agent, can work without manipulation

Guest's picture
Guest

The only way around this (until decent laws go into effect) is to bank defensively. The motto of the banking industry seems to be "profits over people."

Guest's picture
Guest

How hard is it NOT to use your Debit card but to just take cash out each week and when the cash is gone it's gone? If you are really that strapped for cash then follow the examples already on the wisebread website for creating a budget. I know some people are on a really tight budget, but instead of using the cards and risking these overdraft fees, take the money out the bank and take yourself out of the situation!

That said, I don't think it's right that the way they reversed the order of the transactions and that should be illegal.

Guest's picture
Ginny

That's why I bank at my credit union and ignore those "Open a new account at our bank and get $100." Don't know if all credit unions do it the same way (doubt it) but at mine, they avoid all that unethical crap.

Guest's picture
Eileen

its easy to judge and make harsh statements about how people should just have more accountability. When you're living close to the edge a minor situation can become a major one very quickly.

In our case we had our mortgage set to come out automatically from our checking acct. in order to always be on time. This worked well until the month that my check came up short due to some semi-annual hours adjustment at my place of employment. We called the bank that has our mortgage to cancel the automatic payment intending to pay late with my next check and were assured that it would be cancelled in time. Well, guess what... It went through and even though it was the last thing that went through we got charged overdrafts for each and every transaction. $35 each for transactions, some of which were as low as $10. Then the bank submitted the overdraft to our credit card at the same bank (which was already at its limit) which initially paid it and then surprise! rescinded it because we didn't have the balance to cover it incurring an overbalance charge on our credit card and another overdraft charge for the transaction on our regular account. This happened not once, but several times as they resubmitted it over and over.

We called and spoke to a representative on the phone who waived a couple of charges and told us to go into our branch and talk to the manager about putting a Debit hold on our account so that no more automatic payments could accidentally go through. After waiting over an hour we were told that this is "not done" for individuals, only for businesses. When asked what we could do the manager was apologetic and said there wasn't really anything, just to try and get money into the account as soon as possible. We made two $150 payments over the next 30 days but the account was now several hundred dollars in the hole because of all the overdrafts and finally we received notice that unless we paid in full our account would be terminated. We asked if there were any arrangements we could make to keep this from happening and were told no.

I have banked with this bank, Wells Fargo, for over 20 years. I have banked with them when I had much larger amounts of money and they sure were happy to see me then and willing to provide all sorts of service. My taxes are bailing out these banks for tons of money, yet where is the helping hand for people?

Guest's picture

Thanks for the post Will,
It never ceases to amaze me how the horror bank stories keep coming out. No wonder bankers have such a bad reputation. The truth is though that the policies of banks are determined by people in back rooms who never get to see the customer face to face and therefore can not feel the pain of the customer. Maybe if banks turned themselves around so that all the customer facing people went to the back room and the back room people had to face the consumer for a while we might see a change.
Only problem....This I think is a fanciful thought

Guest's picture
mudnessa

We have been having this problem a lot recently. I don't know if US Bank just started using this practice on us or what but within the last few months we have gotten a lot of overdraft charges. We aren't doing anything different than we have for years, yes we bring our account down to a few dollars but not in any way we haven't in recent years. My husband calls each time and so far we have gotten all of the charges reversed but I think we might be moving to a local credit union. I will share this article with him and he will have new ammo to use when disputing these charges.

Guest's picture
nrgdncr

It should be criminal action to collect so many fees from those people that are low income or fixed incomes and can least afford it. The banks are right up there with big oil, no matter how either if them justify it, it's immoral and just barely legal. They're trying to get all the fees they can before the new laws take place.
My husband worked in the past in general ledger for a major bank, helped save them a lot of problems with Y2K. We have seen this trend for several years. Don't try to keep an accurate balance because what the bank keeps is a different than what you have on your computer! We have worked with the banks to return fees, yes if you protest enough they will reverse a couple of transactions ODs but not all, they still keep a healthy profit. We've gone through BBB trying to get some of our fees back but they don't help a lot either. Next is a lawyer and a class action suit as some people are already doing.
Solution for now, a credit union, at least they do not let you use your debit card if the funds are not there and they do go in order of transactions, real time. CU's are not perfect, either, but are better than the banks for now.
There are some times you cannot access cash, and actually some places won't take it! When I was working as a flight rn on the reservations I could not have made it without a debit card, my bank was 140 miles away. We can't al use cash, as much as we would like to have that option.

Guest's picture
Claire7676

Every single person who is reading this article or is commenting on this article needs to go ASAP to their bank (or call) & request overdraft protection. It should cost nothing to enroll.

The way overdraft protection works is that if you ever overdraft from a checking account, the bank will automatically move funds from your chosen overdraft protection account (such as a savings account) into your checking account to cover the shortage. It is MUCH cheaper than dealing with the regular overdraft fees (my credit union only charges $0.50 per occurrence). I'm also sent a letter in the mail alerting me that the overdraft happened.

Here's how much the overdraft protection costs at just a few banks I looked up:

NC State Employees' Credit Union $0.50
Wachovia $10
Wells Fargo $10-$20 (depending on amount transferred)
Bank of America $10 ($100 transferred at a time; if overdraft $300, then a $30 fee (3x$10) is charged; service is free for some accounts)

Sources:
https://www.ncsecu.org/Services/OverdraftProtection.html
https://www.wachovia.com/foundation/v/index.jsp?vgnextoid=fc30fbfaba0aa1...
https://www.wellsfargo.com/help/faqs/odp_faqs
https://www.bankofamerica.com/deposits/index.action#ServiceFees311028439...

Guest's picture
Adam

This is why I use ING Direct for my checking these days. If you happen to overdraft, instead of charging you a fee, they charge you interest on the money. The rate is reasonable, so if you pay off the overdraft quickly, the charge is a few cents, if anything.

Guest's picture
Guest

We are with a local credit union, and have an "overdraft line of credit". A few months ago, they charged us a $30 overdraft fee for a check that cleared. When I called, and pointed out that we have had the overdraft line of credit for well over a year and a half, they quickly removed the charge, citing "computer error" and said they would look into it. Whether it was an honest mistake or not, I don't know, but the way it was handled by the bank customer service rep is why we stay with that credit union.

Financial responsibility is a journey, and I still make mistakes. I am glad to have my money with an institution that is willing to help me instead of hinder my efforts.

Guest's picture

It was rather interesting to read that CBS 13 News "broke this story." I blogged about it back in early July http://www.cardholder911.info/index.php/2009/07/11/overdraft-scam/ but also reported that the practice will cease in February when the rest of the Cardholder Bill of Rights goes into effect. Unfortunately, the banks are dreaming up lots more fees that won't be regulated because the banks just thought of them.

Nevertheless folks, the lesson is simple and there is no excuse for letting it happen more than once. Don't spend more than you have. Is that so difficult? Then again maybe you like paying 1000+% interest.

Tom Mahoney, Director
Merchant911, LLC
www.cardholder911.info

Guest's picture
docsage

This same thing has happened to me. I've been unemployed for over 2 years and try to be really careful. I had deposited a check that bounced, thus causing a cascade of overdraft charges. And when the dust finally settled, I had fees in excess of $700 on check totaling about $200.

So now I don't keep money in the bank. I can't afford it!

Guest's picture
Guest

Your example isn't entirely accurate.

Typically, banks reorder your transaction made on the same day and re-sort from highest to lowest within that day (verses in time order within that day).

Your example shows that they may reorder between dates. No bank I know has EVER done this. They close out each day and charge overdrafts for that day, if needed.

It would make sense if you changed 10/1 - 10/5 above into hours (such as 10/1 at 9:00 AM, 10:00 AM, 12:00 PM, 2:00 PM and 5:00 PM).

Guest's picture
Guest

actually that is EXACTLY what happens!!! The example is very accurate. When you swipe your debit the money is moved from your available balance but it doesn't mean that the debit has hard posted yet....It COULD take a merchant up to three to request payment from your bank so if I charge something on for say $3.00 on the 11th of the month and something for say $89 12th and both merchants request payment from your bank on say the 14th....the $89 dollar is going to post first because it is larger not the $3 charge because the post largest to smallest. it doesnt matter that I charged the $3 first which could result in a snowball effect of overdrafts. The do not close out each day and charge OD's for that day and we all know that isnt true...as a matter of fact...OD's are charged the NEXT business night FIRST before your other transactions again resulting in a snowball effect of OD's. They go by the day the merchant presents for payment not the day it was done and some merchants are faster than others. I have had gas charges hang on limbo for a week on several occasions so we all know that transactions are not processed on the day they are made its the same as writing a check...if you write a check on the 20th and the money in your acct on the 23rd when the check is presented the money better be there or OD and vice versa if you write a check on 20th (with no money in your acct) and pray that you have a long enough float when the check is presented they will pay it if the money is there. I have worked for Comerica, and TCF in the lockbox dept which means I am the one who actually did all these unfair tricky things while you sleep. Needless to say I no longer work at either bank

Will Chen's picture
Will Chen

That's the example provided by CBS.  If you're right, then that means CBS did zero factchecking for their story, which seems unlikely.  At the 1:24 mark, it looks like Jeff is showing CBS reporter his online statements.

Guest's picture
Guest

#27 here:

The video starting at 1:09 looks like it was generated by CBS13, not Bank of America. I am not sure what's going on there.

The video at 1:24 doesn't show the dates or times that the transactions are made. In addition, the amounts there do not agree to the chart shown starting at 1:09. If those transactions are made on different dates and re-ordered, then that's a problem, but there is no way to tell.

In regards to the statement they showed around 1:46, it is POSSIBLE that those are being reordered because of the posting sequence of when the merchant send the details over to Bank of America. For example, I've found that the DVD rental machines at stores (which were the only transactions shown NOT occurring on April 19) sometimes take a few days to hit your account, whereas "live" systems at the grocery store hit right away.

If the latter is the case, Bank of America is at fault for not making it clearer that even though it was dated April 15, it wasn't processed until April 19 (and thus, subject to reordering on April 19). However, this table would have been better for the chart you posted in the original post (showing just April 15 and April 19, not the one above showing many different days).

I suspect there is more to this story that they didn't go into.

Guest's picture

I think it's important that people are aware of this. I've heard so many stories about people that have had to deal with this. We're human we make mistakes. It's a shame that the banks are waiting to compound our mistakes. You make one simple little mistake in an active account and it ends up costing a fortune. I guess it's one more reminder that banks are a business and out to make money. Their first objective is to make money NOT help you. Help you might be second if you have the right bank but not all banks. Great post!

Guest's picture
Guest

Wells Fargo reordering is a nightmare. They really did in my son for hundreds upon hundreds of dollars. At first I thought he was being irresponsible so I started going over all his banking. It was unbelievable. At 20 his credit is shot over this. What a shame. We pulled all 6 accounts and our mortgage from WF over this.

Guest's picture
AndyM

Yes, Will, the punishment fits. It fits because the spender is using money that does not belong to them. Thus, the bank may charge whatever it deems appropriate for the use of its funds.

And Yogi, that's not self-righteousness. I too have overspent, but learned to check my finances more regularly. As a result, I have not incurred further penalties from my banking institution.

Guest's picture
Guest

First, it's not a punishment - it's a cost of doing business. There is nothing "wrong" with the reality of someone living from paycheck to paycheck that makes them fit for punishment. Second, the bank may not charge whatever it deems appropriate. Third, it's not "their" money. It's my money, your money, and all of their other customer's money, insured by the FDIC which is ultimately backed by the taxpayers. Banks have the privilege of handling money that their customers entrust to them and they should do it the way the customer asks. Lastly, banks are hardly responsible institutions. I would trust just about any 18 year to manage their own money responsibly before I would trust an unregulated bank to do the same with everyone's money.

At the end of the day, it's not unreasonable for the customers of any business to demand that they conduct their business in satisfactory way. Ultimately, the voters can decide to take away FDIC backing from any bank that doesn't abide by a reasonable set of rules. At the end of the day, if reasonable people judge that what they have been doing is fraudulent, in the court of law, based on relevant laws, then that's it. At that point you can complain about irresponsible customers all you want but the banks need to be held liable too.

Guest's picture
Guest

When this happened to me with Chase, I went in and complained, they informed me that the reason they do it this way is because likely the larger amounts is for house payments or utility paymnents and such so most people prefer to have those paid rather then bounced. WHile this may be true fact is none of mine were bounced they were all payed and I payed a small fortune in overdraft fees. SO their excuse of why they do it holds no water if they are going to pay the charges anyway. I would have had one overdraft fee had they done paid out the smaller amounts first and the largest amount last. It is so frustrating. I just heard that CHase has been suppose to be offering their customers the choice of what gets paid first since June and this all happened to me in August, guess they only do that for a few or something since I talked to quite a few people about this and got the same story everytime and no offer to change things. It is a racquet and that is all there is to it and they try to sugar coat it. Very frustrating.
I have always been financially responsible but in the last few months have accumalated quite a few medical bills and got my hours and pay cut. It is all good and great to tell people to be responsipal you don't always know their circumstances so you should not judge.

Guest's picture
Lisa B.

when someone steals your identity. About 10 years ago my checking account was attached to my savings account. One day my husband went to a gas station. The attendant somehow copied his debit card number and made a fake debit card as part of a large scale racket. Three days later I go to deposit my check and find a 0 balance. U(seles)S Bank teller says, "Yeah, there's no money in your account, and your savings is almost gone". We couldn't freeze the account till the end of business day, and all in all the scammers drained our account of almost $14,000.

I've been leery of having overdraft protection ever since. So now I just get dinged $27 every time I make an error in my accounting. Hopefully I haven't spent $14000 in fees yet...

Guest's picture
Lucille

I have seen our bank take a transaction from 3 days earlier remove it and reapply it on that new day's transactions. It can cause problems when your trying to keep a running balance vs. your bank's stated balance. We can't trust the bank's balance due to transactions that will be lost in the systems for days or weeks so we try to do the right thing and rely on our running balance. Reordering between DAYS just wastes even more of my time.

We had a glitch earlier this year that caused our bank to catch us in a reordering trap. What would have been one overdraft charge if they had actually taken those transactions in the order they dropped into the account turned into six overdraft fees. The bank also conveniently changed their policy about reversing overdraft fees the same time they started doing the reordering like big banks do.

One thing I have started doing as a CYA just to try to prevent this from happening is to write our mortgage check a few days after pay day. So if we get paid on a Friday I do all of our routine purchases and small bill paying that Friday. Then I write a paper check for our mortgage on Monday. This forces all of the small transactions through the system Monday and our mortgage payment on Tues or Wed. If for some reason we do make a mistake and go over we will only have one overdraft fee. We had this situation happen once in the last year and it did save us what could have been hundreds in fees.

The two things that give us the most protection is trying to keep a few hundred dollars in the account at all times and micromanaging our real account balance. We did also open a second account with ING that we keep some money in that account so if our main bank account does pull something creative we still have funds at hand for basic expenses.

Guest's picture
Diana

If you call the bank they may reduce the fee to only 1 (depending on your situation). 7 years ago I maxed out my checking account and then noticed they charged me 4 overdraft fees. I called then First Union (later Wachovia, now Wells Fargo) and argued with them over the same thing, citing that the smaller charges were first, and requested that the fee be charged only once, since the balance would under 0 only on the largest (and last) purchase. They agreed to drop th other fees.

Guest's picture
Guest

Another problem: electronic clearing. Wells Fargo cleared an electronic version of my credit card payment. Then three days later,cleared the paper version as well. This double payment put me in the negative and over 9 transactions bounced. They admitted the double clearing was their fault, but I had to fight to get the penalties reversed. I changed to our local credit union.

Guest's picture
Guest

This happened to me. That was a very bad day.

anonymous

Guest's picture

There is a way out of this. When you get paid, write checks to pay your mortgage, utilities, insurance and debt payments, then cash out the rest.

Pay cash for everything you don't need to write a check for. Groceries, entertainment, gas, the paperboy. Worked for centuries, but now for some reason we have this addiction to plastic.

All addictions cost money! This one is no exception.

Guest's picture
Greg

Cry me a river! This is the problem with our society. People feel they're entitled to everything. I personally don't care if people who can't control their spending get "screwed" (and I use screwed here in a sarcastic sense) and end up paying through the nose. Thanks to them my bank can afford to provide me with free checking, free checks, free debit cards and free service.

Once the banks stop charging these fees the next thing I'll hear about is people whining about free checking accounts going away and you actually having to pay for your banking services.

Read the fine print, do your homework, don't overspend. And if you can't follow these simple rules don't come crying about banks charging you fees. No one said you were entitled to free checking. It's not part of the constitution...

Guest's picture
Guest

True, people juggle their paychecks with the hope it will clear before other charges are assessed. And....people do need to be accountable for their spending. But it's not always so clear-cut and when banks resort to less than upstanding practices, they have the authority(and responsibility) to withdraw the charges as they come in and in a timely manner. If you don't have the money in your account, why would they allow the charge to go through other than to tack on charges?? If you went into the Branch and asked to withdraw $100 but only had $20, do really believe they would give you the $100? Uh, No!
Don't to be so naive as to believe banks offer "free" checking and debit cards as a "service" for thier customers. They do it to draw you in to their clutches!
Credit Unions aren't perfect, but they are more customer friendly!

Guest's picture
Dick

This is matter of responsibility but also an ethics issue on part by the financial institution. When transactions are reordered and a person is charged nine 35.00 penalty fees on amounts that do not add up to $30.00 worth of transactions there is something wrong with the system. The financial institution is taking advantage of its customers and this is a matter of ethics on their part.
The best alternative would be to charge an interest penalty on the amount that was overdrawn.

Guest's picture
Heidi

Long ago, I had something really awful happen where the bank used this practice, and then some.

I don't remember all the specifics, because it was around 15 years ago. I know I was living paycheck to paycheck, and I know that I made a mistake in balancing my checkbook (transversed numbers... I'm prone to it). So it all started with a mistake on my part.

Rent went through, and cleared. Another larger check went through, eating up the rest of the account balance. 5 small checks bounced like superballs. $25 ding for each one of those. Ok, so what does the bank decide to do? Reverse the rent check, it being the largest. So my account is now positive, because they bounced back my rent. But they still kept the $125 in overdraft fees, too.

The branch manager couldn't explain to me what happened. I camped out in his office until it became clear that he would need to give me either an explaination that made sense, or my money back, or he could call the cops to have me removed. He decided to reverse the charges. I changed to a credit union that week.

What kills me is that they reversed something that had cleared more than 48 hours before the superball checks hit. It's not like all this stuff went through the same day. Now that's sleazy.

Guest's picture
Des

I'm with Greg, it seems everyone here feels *entitled* to banking services on their own terms. Why can't you do what you want with your own fund? You can! Carry cash and don't use banking services. If you want to use the BANK'S services, you need to play by the rules. One of those rules is don't spend money you don't have. That sounds fair to me. Everything is fine when you spend YOUR funds, but when you try and use the *bank's* funds, you have to play by the *bank's* rules. How is that unfair??

And really, who *doesn't* have overdraft protection on their account these days?

Andrea Karim's picture

Eileen, I had the same issue with my credit union. Even they will do what they can to grab money when they need it.

Guest's picture
Pam Munro

I don't think it unreasonable for the banks to reveal how they regularly fiddle with the numbers. I have tried to get details many times & no one will TELL you what is actually going on. Is that legal?

Guest's picture
AndyM

Greg, Des, I think we're on the same page here.

Having a bank account is a business arrangement, not a luxury. If a customer is concerned about overage, they should maintain a buffer in their checking service.

Guest's picture
FrugalZen

and I have **NEVER** overdrawn my account since I opened it in 1976.

Basic, Bare Bones, No Frills account. No ATM or Debit Card and the account is marked that None are to be issued by my request.

But I also refuse to use ATM's (I worked at that bank and learned how the system works and it terrifed me) and keep at least the minimum balance needed to avoid the monthly maintenance fee for having the account.

And before you complain that I'm losing Interest by letting them have my money I avoid $20 a month in fees by keeping $2500 in the checking account...If I put the money in a savings account and paid the fee instead I would need to earn at least 10% just to break even.

Fee avoidance is also a "Wise" Investment.

Guest's picture
Guest

Banks cry about all the money they lose. It's the consumer who is losing. Think about this. Say you have direct deposit to your checking account and you have a check card/ATM card linked to your checking account. You go pay bills online and go over into the negative on your checking account by -200.00. You finally get your direct deposit of 1,025, which really turns into only $825 in your account. You're not getting your whole $1,025 because you "borrowed" $200 from your that incoming paycheck. Therefore, since you are using your own money, you should not be charged. It's such simple logic, I don't know why the banks can't see this. It's YOUR money, not the banks.

Guest's picture
AndyM

Not in the sequential sense. You've hypothetically spent the money before it was processed. Which...isn't yours to use without a penalty.

Anyway, if you don't like the way banks do business, go put it in a mattress.

Guest's picture
Guest

My husband is sorta lousy with money. We pay for it quite some bit and have tried multiple strategies (including cash only) to help him out. I think his folks must have dropped him on his pocketbook at some point. In other words, yeah, we know he needs to better with his money and yeah, we do take personal responsibility.

And still I wonder, how did the bank justify letting such a lousy customer run around town for a week honoring his bogus debt card swipes? Did they ever cut him off? Nope. How long did it take for them to give notice? Oh, that never happened. I snooped (an accepted and encouraged practice in our household) and we went to the bank without ever so much as a call, letter, or e-mail on their part to discuss the TEN overdraft swipes.

As a business practice, is this wise? Superficially, one would presume that a bank would hate to have a deadbeat customer like my husband. On the contrary, they never cut him off because they know we pay our overdraft fees because we *do* take personal responsibility. Even so, this was too much and we closed out his accounts with Wells Fargo.

Guest's picture
Guest

Andy M, IT IS SO MY MONEY! Guess you don't see logic like I do. Oh, I forgot, we're not perfect like you.

Guest's picture
Nicole

Who hasn't this happened to? This happened to me recently. I actually have not yet taken out my money, but I will. I am going to switch banks. It's stealing. I made one charge over not even totaling 1.00 over and I was then charged over 400 dollars in fees because they did this. The bitch of it was I even HAD the money I could transfer, but by the time I did it was too late. I don't spend my money when I don't have it, but this set me back for almost 3 months where I had to live like a miser. I am a student and don't have 400 dollars just to throw away to these fees.I even called and complained to no avail. They don't care. They just keep taking our money and we get screws because we don't have options.

Guest's picture
AndyM

One dollar over is still over. The illusion is that since you are not using paper currency, the rules of exchange have been changed. But this is not the case. Learn from the consequences and drive on.

Guest's picture
Guest

Yes, Andy, the bank is entirely within their rights to charge a fee for loaning you that one dollar you don't have, but isn't it just a *little* excessive for them to charge a consumer $400 for that $1 loan?

Guest's picture
Kim

With Keybank, you can't use a savings account or credit card for overdraft protection. You have to open a line a credit. If you are having financial problems, how is more credit liability going to help?

Guest's picture
Guest

Why do you feel that the banks should cover your overdrafts and not charge for them? If everyone balanced their checkbooks, there wouldn't be an overdraft fee problem at all.

Do you realize, that every time you make a transaction, the bank has to process it and it costs them money? Also, the banks have to keep certain reserves in cash to be able to process their customers' transactions (the ones who actually have money in the accounts) and when you spend the money that you do not have in your account, the bank has to "borrow" that money to cover your transaction. Yes, we all make mistakes, but that why there is a thing called "overdraft protection" which can transfer the money to your checking account from your savings or credit card.

As for the legislation so many here seem so excited about...I am for it, but I think it would only be fair to also make it illegal to mismanage your funds and should be punishable by a jail sentence.

Guest's picture
Guest

Punishable by a jail sentence??? I think thats a little extreme.

Guest's picture
Guest

I am old school and still carry cash. I do use my debit card but I am sure of my balance before using it. I have an account at a bank and one at a credit union and I use my cards all over the world without problems. The problem here is people do not feel they should be held accountable for their actions. If you use your debit card and do not have enough to cover the charges, you should be charged for this. If you do not want the charges, use cash instead. If you do not have the money, don't spend it and then blame your bank for your stupidity. Everyone seems to want something for nothing but I can tell you that ain't gonna happen. If they do not charge you fees, you will have to pay per transaction. Free banking is not as free as you think.

Guest's picture
Guest

I think the REAL issue here is you misunderstanding the article all together. No one says they shouldnt be charged for using money they don't have....we are arguing that the banks are manipulating the way the process things in order to collect more money in overdraft fees. if you have $100 in you acct and u spend $12, 10, $5, $15, $20, $3 and $60 in that order yes you went over and should be charged and overdraft for the $60 charge. But no the bank pays in this order 60, 20, 15, 12 (OD), 10(OD), 5 (OD), 3(OD)...THEY HAVE JUST HIT YOU WITH FOUR OVERDRAFTS WHEN IF THEY PAID IN THE ORDER YOU DID THE TRANSACTION YOU WOULD HAVE ONLY GOTTEN ONE CHARGE.

Guest's picture
Vanessa

I was at Woodforest National Bank several years ago when I overheard a disturbing conversation by two of the tellers. The first had just finished helping a customer with a deposit. She said to the other that the customer had just deposited cash but that she had a pending transaction that would have put her in the red without the deposit. She asked if she should still charge an overdraft fee and the other lady answered yes!! I could not believe my ears. This was not an automatic thing, but a conscious decision! I closed my account right then and there and made it very clear why.

Guest's picture
Guest

Gee, where I live, my debit cards act in a very zero sum manner.
If I attempt to run through $30 worth of groceries, and there's only $29.92 in the account, guess what? No cigar. Plain and simple.
(remove the cheez doodles from the cashout counter, and all's well in candyland.) That's it.

My point is this: When will this issue be addressed (by those who make a difference) as a breach of trust? Because that's what it is.
What the hell ever happened to that good old-fashioned notion that one's hard-earned cash is in the bank for safe-keeping, not for mugging, thieving, priacy or any other opportunities designed to pad the pockets of those who already have enough.
Predatory is the word that comes to mind.

There are, no doubt, many hard-working souls in our fair society who are, shall we say, a tad math-challenged?
Shepherding a bank account safely through the jungle wilds of bankerland should not require the intrepid valor of an economics doctorate. Most - just don't possess those numerical-juggling skills.

To all those who pshaw at such outrage, who would blame the vitims every time, just look around at what now sustains America. P.T. Barnum did have it right - there's a sucker born every minute. Only one problem....
Since when did America become a circus? Thought is was a rather proud country, actually.........

Guest's picture
Guest

Very Eloquent!

Guest's picture
Guest

Good for you Vanessa for closing your account when you found that out. Banks can't get away with this.

Guest's picture
Seth

While I've been careful about not incurring overdraft fee's, the one thing I have had my bank do is when I had someone elses check bounce (that I was depositing into my account) my bank charged me a fee for their check bouncing and told me I should get the money from the person who's check bounced... I was thinking: Umm, if the check bounced, what money are they supposed to pay the fee with?

Guest's picture
Gaillynn

I was going to withdrawl money from a Dollar Bank ATM and I decided to cancel the transaction and was then charged a fee of .50 for canceling it. Since when it banks start charging someone for NOT withdrawling money from their machines?

Gail

Guest's picture
Dave

My credit cards now have two rates. My regular contracted rate and the rate they will switch to if I am ever late. This is usually around 30% and applies to my entire balance, which in some cases may exceed $5000. I find that payday loans, although extremely expensive themselves in terms of APR are preferable to having the lender boost my credit card rate to 30%. The same applies to bounced check fees.

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David in Newnan

BOA has done this to me a couple of time. I will be shopping for a different bank. Yes I will accept the first charge as MY FAULT and yes I should keep my accounting in check, but I am human and make mistakes sometimes, So I will accept the one charge I cause but not the other four from their creative posting!

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Guest

Thanks to Wells Fargo and Walmart, I have been screwed out of $494.

A few days ago, I made Christmas gift purchases from Walmart. Totaling $156.00. They immediately withdrew it from my account, as expected. Three days later, I checked my account to find that I had a balance of $144 on it. Now, I had been expecting a bonus from work from the prior month before (November) because I was paid time and a half for both Thanksgiving and Black Friday. Now, being suspicious I waited a day.. The money still remained in the account, so I went and purchased a few more gifts and treated my fiance and myself to lunch. A few days later, I made a startling discovery of -327 on my account. Confused as to why this happened, and seeing all of the over draft fees, I called Wells Fargo. They told me that Walmart had taken the money out of my account, put it back IN my account, and then had TAKEN it out again. Thus, leaving me with a "negative" balance. I explained to the banker that my account was not in the negatives when I made these purchases, and they went on to transfer me to a Supervisor who told me that it was legit.

Now, not being able to argue anymore, I accepted my fate, blaming only myself.. My checks are around $600 every two weeks. And that being half my check, and my fiance and I barely making it as it is put us in devastating mood. We crunched our numbers, and decided we could make do with what we were going to get only to have our hearts shattered when they added MORE over draft fees two days later.. Causing a total of $494 that we owe our bank.. We have just gotten our check direct deposit.. We have a total of $130.

My question is.. Is this legal? Because this doesn't seem legal to me.. And if it is.. How is it possible? I can see them taking out the $144 out of our checks.. But why do we have 10 over draft fees when our bank account was not in a negative.. And is it legal for walmart to take our money out, put it back in and then take it out again?

Someone please respond.

Guest's picture
Ell

While I agree that someone overdrafting themselves 5 times a month may have other issues I find the practice of what most banks do terrible. I spent 1.5 hrs arguing with citizens bank over .19 (yes nineteen cents). I have done really well for awhile but I have an issue with numbers. Sometimes it says 3 but for some reason my brain sees a 9. I had a electronic check sent out but it was supposed to go out the following week, it was sent out a week early and it put me .19 in the red. You guessed it. $39 overdraft fee. The customer service was terrible... I even had provided them with medical documentation of my disorder.... They don't care. They just want their money. For a long time customer... they were willing to lose my business over .19 when I repeatedly told them I did not want overdraft protection. My search for a more human bank continues....