Overdraft Charges: Fallen from Grace Periods

We’ve noticed in our short tenure as The Consumerist that few of customers’ complaints against companies actually involve large sums. Take this bit of hatred about Bank of America:

In fact, my reason is very petty $19.
That’s the overdraft fee I was charged because while Bank of America (and I) slept, the banking trolls determined that my account had insufficient funds for a couple of hours before my payroll direct deposit posted and after a charge of $40.49 posted.
Though no representative of Bank of America will tell me what exact times each transaction occurred, they assured me that they know that the bad one came first, and that even though they have no specific record of it, they can assure me that I had a negative balance… for an undetermined period of time.

Cutting it close is user error, for sure, but we can remember (imagine?) a time when banks used to cover for a person when paychecks crossed the finish line just behind a check for eighty-nine cents. (We have a thing for those little brown coconut donuts.)

Does anyone out there have a bank that doesn’t nail you for cutting it close?

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  1. Phil Ulrich says:

    My bank, U.S. Bank, does nail me for cutting it close… plus, on top of that, they’ll pre-emptively charge overdraft charges for tentative charges to a debit card. The story:

    I found a decent laptop on TigerDirect for approx. $250 a month for four months. This, for me, was a reasonable and easy amount to pay. So, I went ahead and placed the order, not noticing that TD doesn’t accept debit cards for their Easy Pay program because “they can’t charge four separate payments to a bank” or something like that. Banks won’t authorize it, they told me later. Luckily, after placing the order, I immediately checked my checking account balance – which was in the region of $-700, tentatively, because the charge was authorized but not final yet.

    I immediately called TigerDirect to get an explanation and cancel the order, which was no problem, and they told me they’d contact the bank and tell them the charge was canceled, and it’d disappear sometime in the next 48 hours. Well, 72 hours passed, that charge was still sitting there, and – because I live by my debit card – I had racked up $180 in pending overdraft charges. My bank balance was not even officially negative yet. So I called U.S. Bank.

    “Oh yes, sir,” they tell me, “when the charge from TigerDirect disappears, those overdraft fees will too. Sometime in the next 48-72 hours.” So they artificially ratchet up my balance back where it should be by manually replacing the charge, and I go away satisfied… until I notice that the charges had went from pending to definite. Yes, sometime during that period, before my bank balance was officially in the red, those pending charges became official charges.

    To add insult to financial injury, when the charge DID vanish from my authorizations (which, incidentally, took roughly 5 business days), the overdraft fees did not – I had to call to have them manually reversed.

  2. Eirishis says:

    Actually, Wachovia (available only from Florida through Pennsylvania, if I’m not mistaken) charges for overdraft, and does the same “largest charge first” thing as BoA…but with two important features:
    1) Free checking accounts come with overdraft protection.
    2) The overdraft protection kicks in $100 at a time, with a one time charge that isn’t particularly big.

  3. mitten says:

    I do my business banking at TCF Bank. I don’t cut it close often, but I did have an occasion when two checks came through before my deposit to cover them was posted. I called customer service, explained that I had missed by ‘just this much’ and she rescinded one of the bounced check fees for me. I thought that was pretty nice.

    I imagine they wouldn’t be as generous if you do it all the time, but my husband had a similar thing happen and when he called, they offered the same to him – only charging him one fee although 2 checks bounced. Of course TCF didn’t have to do that, but it sure generated a lot of good will with this customer!

  4. Jim Kosmicki says:

    I HAVE to comment on the whole bank fees thing. I don’t know why it’s so hard for people to understand this one simple fact: credit unions are your friends. They don’t have multi-million dollar advertising budgets so they often get overlooked.

    But I can usually get almost anyone interested in a credit union with one simple phrase: “non-profit bank.” because that’s what a credit union is.

    In my experience a lot of credit unions are limited membership based on certain criteria, but almost every good-sized population base has a credit union based simply on being a resident of a particular county, city, suburb, etc. My credit union not only has reasonable fees, but they listen when something goes wrong and have always corrected it in my favor with little to no fuss.

    The only negative with my credit union right now is that the ATM network they were affiliated with just changed owners and got rid of all non-corporate affiliations. So I’m much more limited in my ATM access without fees, but since they were among the first in the area to have debit cards, I find that I don’t actually use my card at the ATM as much anyway.

  5. Rick says:

    I use Bank of the West, they merely wait until a certain time every night to post all deposits and all withdrawals. So at 12:01am all my deposits are posted, then withdrawals are posted about an hour after that. This solves the problem pretty simply.

  6. I use BoA and have my check card linked to a BoA cc, so if i overdraft the extra bit gets charged to my cc and i incur no fees. I signed up for this program 5 years ago when I was a freshman in college so I don’t know if it was just a college program to give kids learning how to deal with money a bit of float, but it did save my ass once or twice.

    Maybe ask BoA about this?

    I also can’t help but suggest if you are having that many problems with overdrafts, you should invest (or be resourceful..) and find a copy of Microsoft Money. Easy for the novice (like me) budgeter.

  7. RowdyRoddyPiper says:

    Taylor, thanks for the tip on the CC overdraft. I’ve had my checking linked to my savings to avoid the overdraft fiascos of my misspent youth. There is the drawback that they charge roughly $5 to transfer the money from savings to my checking to avoid overdraft. If the credit card is free, maybe I’ll answer the solicitations. I would triple check the accuracy of the “freeness” though. The link below is the answer from BofA to the question “What is the cost for overdraft protection”…notice the answer.

    http://www.bankofamerica.com/deposits/checksave/index.cfm?…

  8. blee says:

    First Internet Bank of Indiana (firstib.com) covers checking overdrafts from my money market. They also re-imburse up to $6 of ATM fees per/mo.

  9. RRP: That answer leads me to believe the cost varies depending on the promotion you get under. Maybe I just got lucky.