Americans paid $17.5 billion in overdraft fees last year, up from $10.3 billion in 2005. Consumer advocates say banks should be held responsible for their abusive practices, such as “clearing high-dollar debits before subtracting smaller amounts, putting holds on deposits longer than necessary and failing to warn customers at the checkout or ATM if they have insufficient funds.” The American Bankers Association counters that consumers are the ones who should be smart enough to keep track of their available funds: “Only they know what checks they have written, automatic payments they have authorized and debit card transactions they have approved.”

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  1. banned says:

    Don’t use major banks!

  2. Tombfyre says:

    Stuff like this is getting to be a problem up in Canada too. Friends and I are forever complaining about the banks, because of their poor practices with our money. They’re the bank, they should know how much money is in your account. Yet they try and auto-withdraw things even if it would put you into overdraft.

    Hell, what does an overdraft cost them? Probably a few cents, seeing as our money is all fiat currency drawn out of the inkwell, not to mention just being 1′s and 0′s. Yet they still charge you anywhere from $20 to $40 for NSF fee’s and whatnot.

    Most of their practices over the years have just been downright mean, if not entirely honest. I’m sure we all remember how those new fangled ATM things were supposed to cut costs and speed up banking…

  3. letoofdune says:

    Don’t spend money you don’t have. Don’t even flirt with that idea. Don’t even come CLOSE to spending money you don’t have. If you’ve swiped the card, take it off your budget, even if it hasn’t cleared. Act like the money isn’t there.

  4. enm4r says:

    @letoofdune: If you’ve swiped the card, take it off your budget, even if it hasn’t cleared. Act like the money isn’t there.

    This is the consumerist, personal responsibility is checked at the gates.

  5. bohemian says:

    I just do not have the time to micromanage all of the potential pitfalls and gotchas that banks are coming up with today. I keep leaning more and more toward cash on hand.

  6. Mr. Chip says:

    If you deposit money on Monday and make a debit on Wednesday, the reasonable individual would assume that the debit could be made against Monday’s deposit, even if this is not the case.

    What kills me is that the fix for this is pretty easy, just keep a $500 minimum cushion in your checking account (which is the minimum amount for most banks to turn your checking account into an interest-bearing account), and all your overdraft problems magically vanish. If you can’t afford a $500 float, keep $300, or $100, or whatever. Just make sure there’s a cushion there, and never go below it.

    Or, fire your bank, and get a credit union.

    The fix for consumers is an easy one.

  7. ceejceej says:

    @letoofdune: Don’t deposit cash to BofA. It won’t post until the next day at 10am, and they clear all debits before they post any deposits and/or credits.

    Even when you do everything right, when the bank has “gotcha” practices like these, you’ll always get screwed.

  8. azntg says:

    People SHOULD know better, I agree. If you don’t have the money, don’t use it.

    But, I don’t think the bank’s completely off the hook either. They’re picking up practices (shady, if you ask me) to cash in on people’s mistakes [e.g.: applying higher balance stuff first, not denying the transaction altogether, etc.]

  9. erockO says:

    I am very frustrated with Wachovia lately. My boss and I both have wachovia accounts and I need to actually instruct the tellers to deposit my checks in full. If not, they treat it like a deposit from another bank and it takes DAYS to process. WTF is that? My other frustration is with ATM deposits. If i deposit something on monday and it clears on Wednesday then the deposit should be retroactive in case I have over drafted. Since when did the consumers become the ones begging banks for good service? I always thought that banks would be bending over backward for us. ;(

  10. letoofdune says:

    @azntg:

    They’ll never deny the account all together. Part of the nifty thing on most checking accounts is “overdraft protection,” something the banks try to sell you as a plus, but is actually a negative.

    They banks make you feel like you’re getting something, special, that you’ll never have the ghastly embarrassment of having your card rejected. But that doesn’t matter for them.

    You’re getting screwed because they’ll accept it, and then fleece you trying to recover that money, plus whatever interest and fees and voodoo magic they’ve put on your account.

  11. kaitlind says:

    Go to a Credit Union…. I got fed up with WaMu after a teller downright lied to me a couple times in one visit, then refused to let me close my account (I had to go the bank the account was established at to make any changes- it was a five minute drive but it pissed me off).

    My CU has always been helpful and nice, they gave me an awesome deal for a first time credit card, and even with ATM deposits they always give you $500 available the same day. I was told that this credit amount could be changed (made larger) upon request. They’re not trying to screw me over every which way, and I love it.

    I go to BoA almost everyday and I cringe every time they ask me if I want to open an account or I see a teenager getting their first checking account with them. What they’re doing is shady, and there’s no reason to do business with them if you can find someone who’s honest.

  12. hoo_foot says:

    What happened to personal responsibility? It’s not the bank’s fault that you spent too much money.

  13. Falconfire says:

    @enm4r: Thats not true at all, and if you have ever posted here, you would know that consumer responsibility is key, and you get flamed pretty fucking hard for being a douche.

    But Banks are not playing fair here, and this has been known for years.

    1) Debit cards should easily have money deducted from them. My Visa card that day has purchases show up, My Visa debit card can take 2, 3 days or longer for a debit to show up sometimes.

    2) Debit cards USED to block purchases that hit the limit which for Summit was like 10 bucks. Mine hasn’t done that in years now since changing hands to Fleet, then BoA. You know full well this was done specifically to get the 35 dollars overdraft fee from the customer.

    3) the design of the debit card leads to overspending. Check books came with ledgers. You wrote a check, your wrote the balance in the ledger you knew right then how much you had. You dont even GET a ledger with a debit card, and if you watch those lovely commercials for them, they love to spout off how much quicker they are and how people behind you get pissed off for writing checks.

  14. 12monkeys says:

    Credit Unions are not much better.I am in the process of disputing 22 overdraft fees on my account that were caused by a bank error. To make matters worse, I HAVE overdraft secured to my savings and there is always plenty to cover just in case these mistakes happen. I was charged $550 for $165.96 in “Overdrafts”And some of those overdraft fees caused other items not to clear, so guess what more fees.

  15. consumer_999 says:

    I recently had one of these, but only because the idiots at the bank made an error. Two hours of my time, a letter to the government to “please cash the check again” (it was a tax check; thanks, bankers! …friggin morons), and the bank admitting it was their error in writing, they refunded my fee and uh… that’s it.

    What I want to know: where’s my payoff? Aren’t bank errors supposed to mean $omething for me, or is that just in a game of Monopoly?

  16. Chicago7 says:

    And why does a check always get posted twice. And therefore, is an overdraft twice. Through no fault of mine, my landlord double billed me for rent (I have direct debit for rent, but NOT ANY MORE!). The same debit was posted once in the morning and then the next morning. I asked the bank and they said it did that automatically. Why? They couldn’t tell me.

  17. wring says:

    “clearing high-dollar debits before subtracting smaller amounts, putting holds on deposits longer than necessary and failing to warn customers at the checkout or ATM if they have insufficient funds.”

    OMFG yes please stop these practices!

  18. sunnfun says:

    I think the main problem with the Banks in the US is that the System is designed to take maximum advantage of the customer in case something does not got the way it was supposed to go.

    For instance Bank Atlantic here in Florida: I deposted $2500 in cash into my account at 7:50pm on a Saturday evening (Most branches have the drive-through open till 8:00pm or later). I asked the clerk when the deposit would be available, answer was “immediately”. So, when I got home I checked my online banking and sure enough my available balance showed the deposit. I then transferred $2300 into my MMarket account (Same Bank, same account holder etc), the balance after that was about $450.

    On the following Tuesday my account showed three overdraft charges of $32 each for a total of $96. I called immediately and was told that there is a “cutoff” for deposits (even cash) at 5:00pm so my deposit was not going to post until the next businessday (Monday, even thoug they’re open on Sundays) and my three transactions for the saturday and sunday of a grand total of $15 incurred $96 in overdraft charges. I was told that the “available balance” should not be used to determine your available balance because it might change due to “undisclosed or pending transactions”.

    Just google “Bank Atlantic sucks” and you find more stories like that. I’ve since closed my accounts with Bank Atlantic and moved to a local credit union. At least they promised me to not do stuff like that.

    In Germany for instance everyone (Unless you have really really really bad credit, and then transactions will just be denied) gets a line of credit of at least one monthly salary (Typically three) on their checking account at currently 9.07% APR and even if you have to go beyond that they charge you only about 4% on top of that. So on an overdraft of $100 for three days you just pay $0.08 in interest. No overdraft charges, no returned checks fees, no nothing, just interest. No wonder Creditcards have a hard time catching on over there.

    But I guess all the Banks and Payday Lending Places in the US just make too much money and the politicians are to well payed off for even thinking about a system that is a little fairer.