College Student Learns How Overdrafts Work

Forgive me, I’m a bit emotional over this. I’m raging mad and sad and disappointed because today Wells Fargo just lost my business. Yeah, I screwed up in this, but I’m a poor college student, and I thought I fixed it before it was a problem…

So, Saturday night I made two Paypal purchases. When I looked at my bank account, I noticed that I didn’t have enough to cover them, so I transferred enough to cover both purchases and the overdraft fee from my ING Direct account. Monday rolls around, my Paypal purchases come through, and my transfer shows up as pending. Okay, I thought, so I’ve got that covered, cool. Tuesday morning rolls around and my deposit has posted and I’m in the green, with enough to cover the inevitable overdraft fee. Then, Tuesday night I decided to check in on my account. TWO overdraft fees has posted, and I’m deep in the red. Not to mention I had bought a stamp today that puts me deeper in the red, though not by much. So I call Wells Fargo, explain my situation and confusion, and ask to speak to the manager. I’m put on hold, the music plays for a little while, then stops. I sit for another five minutes with no reaction from the phone, so I hang up and try again. I am transferred to the manager, but this time I don’t even get the music, it just cuts off. The third time I finally get through to a manager, who, after I explained the situation, informs me that, yes, every item will be subject to an overdraft fee. This means I might get another overdraft fee from having bought the stamp today.

I know this is mostly my own fault, but after about ten minutes on the phone I couldn’t even get her to reverse one of the fees because it “wasn’t a bank error.” I just think it’s a little unfair that I’m looking now at potentially over $100 in overdraft fees for something I thought I had corrected. Consumerist, I put this out as a warning. I used to love Wells Fargo, but now… the magic is gone. I have to move on. Probably to a Student Credit Union- I’ve heard good things about them.

-DM

DM,

In the final tally, deductions are taken out immediately. So if at any point there wasn’t enough money to cover the charge, there’s going to be an overdraft. Technically, you’re screwed, but if you call the Wells Fargo 1800 number and say please, they might show mercy and refund one of the overdrafts. Switching to a credit union is a good idea anyway, but don’t expect them to be more lenient on the issue of how quickly items are debited, though they might be more sympathetic when you overdraft again.

Comments

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  1. Leiterfluid says:

    Is this a good time to repost the “Don’t Buy Stuff You Can’t Afford” video?

  2. C2D says:

    Live ‘n learn. It’s only money… Not something actually meaningful.

  3. UpsetPanda says:

    1) What the heck were you buying that you didn’t have enough money in your checking account?! If they were big ticket items (big ticket in college is…$100?), and you have to transfer money into your account to cover the cost, it’s kind of obvious you can’t afford whatever you were buying anyway.

    2) Hindsight is key I guess, but always check your account before making any purchases. Or at least make sure you’ve got enough to cover whatever you’re buying.

    3) It sucks when you’ve got pennies in your account, doesn’t it? Stop spending all the money you have in there. Then you won’t overdraft when you do spend a little bit of money.

  4. nglatt says:

    Honestly, I have roommates that have done a whole lot more damage with Wells Fargo. Call the 800, they’ll probably meet you halfway or so if you’re nice and ask politely – be sure to explain you were genuinely confused and this was your first incident. Do it quick before it becomes non-reversible. You won’t find a bank that will be more forgiving or not charge overdraft. Just give yourself a few extra days on every transaction and deposit and you’ll be fine.

  5. RonDiaz says:

    Google “wells fargo sucks”

    I can tell you from personal experience that their online account viewing is purposely inaccurate to goad you into over drafting some tasty profitable fees.

  6. HungryGrrl says:

    In the future, check your account balance BEFORE making any online purchases.

    ING doesn’t promise very fast transfers, do they? I think they say it can take up to five buisiness days. If you need your money to be more handy, you’re better off just putting it in a regular savings account with the same bank your checking is with, so the accounts can be linked. Some banks will do an ‘automatic’ transfer to prevent overdrafting a checking account if you have a savings account with them.

    If you don’t have enough money for day to day purchases, you SHOULD NOT BE IN A HIGH YEILD SAVINGS ACCOUNT. Only start one of those if you a) keep enough money in your checking to cover monthly expenses and b) have enough money in a handy savings account to be a 3-months-expenses ‘emergency’ fund. When you have those two goals met, THEN open the high interest savings account.

  7. I was in a similar situation in April. $100s in overdraft charges and threatening letters and phone calls on a weekly basis.

    This all happened while I was on vacation, so I had no idea till I got home to a full answering machine and mailbox.

    Anyway, infuriated with Wells Fargo’s 800-number (and many, MANY hassles in the past) I went to my local branch and demanded to speak to a manager, who I then told to close my account.

    Seems that’s all it took to get all the charges removed. It also might help if you’re a long time member with Wells Fargo.

  8. Don Roberto says:

    ARrrrgh Shiver my timbers. This reminds me of the bad taste of paypal. I HATE paypal. For one, if someone asks for paypal, then I absolutely must use my really old paypal account, which sees use once every year or so. Of course, I move my money around, so the associated accounts on paypal are CLOSED. Paypal makes it all too easy to click pay without knowing where it’s coming from. GUESS WHAT? It came from a closed account. I got a little note from my closed account that I was overdrawn… UGH!…

    Anyway, why can’t they just let me enter a credit card number and click pay? Or at least, if they insist I login with my account, then make it patently obvious which funding source they’ll suck money out of.

  9. lucidpsyche says:

    As a college student who also uses Wells Fargo (though much less now, since there are no branches within like a thousand miles of where I go to school), you can get them to be much, much nicer if you actually go into a branch instead of calling the 800 number.

    Basically, my parents and I had a joint savings account where my parents would deposit money for school-related expenses, which I would then transfer into my checking account. Well, my parents got into some financial trouble, and occasionally one of them would take money out of the joint account to cover a bill. Since there’s apparently a limit on how many withdrawels you can make per month in a savings account (and they looove to charge you fees if you exceed said amount), they suddenly switched the account over to a checking account. Didn’t receive a new debit card, never got checks, started getting charged for having a checking account, etc.

    I went into a branch to ask about this. Since I’m of college age, I got the checking account changed to a free college checking account AND the fees refunded, a free set of checks (and fancy ones, not the generic ones they give you), and now I’m waiting on the debit card. They were really, really nice about the whole thing.

    In fact, I get more frustrated with the textbook buyback people than I’ve ever gotten by going into the Wells Fargo branch.

  10. tcp100 says:

    Usually, if you’ve never overdrawn before, banks will gladly refund you fees on your first mistake – if it was a mistake.

    However, since the OP seemed to know right away what the OD fee would be and how the whole system works, it makes me think that maybe this wasn’t his first overdraft. If that’s the case, any bank is much, much less likely to be sympathetic.

    And while the credit union love is more or less deserved – I do think it’s getting a bit overhyped here. Credit Unions are not a license to overdraw left and right without penalty; if you’re the type of person that spends money you don’t have based on a “guesstimate” of what’s in your account, you’re gonna have a problem no matter where you bank.

    The rules are simple, really..

    1) When a transaction has happened, the money is GONE. There is no such thing as the “float”.
    2) Your ATM balance is NOT your real balance. It’s affected by holds, delayed transactions, and all kinds of things. Only YOU can know your true balance – by subtracting debits from deposits! Look into Microsoft Money, Quicken, GnuCash, whatever – and tally up your reciepts nightly, weekly – whatever works for you.

    3) Never “count” on a transfer being there, especially from another institution. Check deposits can take extra days to clear for no reason at all , and ACH transfers can get delayed.

    You just have to start thinking that way.. If it’s too much of a pain-in-the-ass, then may I suggest something known as cash.. It doesn’t bounce, and you can’t overdraw on it.

  11. Scooter says:

    I’ve had problems with overdrafts at Wells Fargo in the past, and in my experience, it has been the only thing I’d praise their customer service for. Rather than call the 1-800 number, I went directly to the branch where I opened the account, and actually ended up speaking to the kind woman who helped me open the account many years ago. After explaining my situation to her, she promptly agreed to waive more than half of the fees.

    Granted, this was the ONLY good experience I’ve had with Wells Fargo. Last year I switched to my company’s credit union. So much better.

  12. UpsetPanda says:

    @tcp100: “You just have to start thinking that way.. If it’s too much of a pain-in-the-ass, then may I suggest something known as cash.. It doesn’t bounce, and you can’t overdraw on it.”

    But you CAN look like an idiot in the checkout line because you’re a dollar short on your purchase :-P

  13. crnk says:

    a lesson in how this guy should manage his money?

    Honestly, I only got hit with an overdraft once….someone held onto a check for quite a few weeks before cashing it, and I overspent my account by about $20 when buying groceries the day it cleared….still can’t figure out why it didn’t just deny it as a NSF/credit limit style denial and just not let me purchase it.

    Anyway, this isn’t even about consumers and excessive fees….it is about someone who made a stupid choice and decided to try and float with instant funds.

  14. dh86sj says:

    This is what a credit card is great for.

    Also, I’m going to have to disagree with the aforementioned advice about high interest accounts. For students paying tuition each semester, plunking 6g’s in a high interest savings account for 5 months is a lot better than letting it wallow in a checking account. The interest I make will take a nice chunk out of my book expenses for next semester. Or help me throw a big party. Either way, I’m ahead of the game.

  15. Anonymous says:

    I used to be terrible when it came to overdraft fees. I tried my best to stay on top of everything, but, inevitably, I would screw something up and get slammed with 2 or 3 all at once, several times a year. I’ve gotten better about my money management at this point, but for anyone out there looking to avoid excessive overdraft fees, I can’t recommend enough ING’s Orange Checking account.

    4% interest, no minimum balance and free online bill pay. The best part for us habitual over-drafters? No over draft fees. Instead, you are issued an overdraft line of credit, and while the interest is rather high (I believe mine is around 14%), if you cover the balance quickly, in a day or two as I usually did by transferring from my savings account (also with ING now, 4.5% interest), your overdraft charge goes from $25-30 down to around $0.14.

    To me, it seems an amazingly fair way to handle overdrafts, and potentially save some people $100s a year.

  16. missdona says:

    Did I read that correctly? Did our poor college student not pay cash for a single stamp?

  17. theDM says:

    Umm.. I wrote this in.

    Yeah, the reason that I didn’t have enough money was because I didn’t consider shipping costs. It was a mistake. I talked with them for a good hour about any possibilities of reversing it. I have recently opened the ING Electric Orange checking, so I have no reason to deal with Wells Fargo other than have my deposits go there which then transfer to ING.

    Yeah, I screwed up. But seriously, if the two payments go through at the same time, they charge you an overdraft on each one? That’s just sick. Especially since I had made a conscious effort to try and correct it, acknowledging that I would get an overdraft fee.

    This wasn’t my first overdraft, but it was the first that was my fault. The other was a banking error which I (stupidly) paid because that was back when I was naive.

  18. theDM says:

    (The hour on the phone happened later that night after I wrote an email to Consumerist)

  19. theDM says:

    @missdona: i didn’t have any on me, and I knew I had transferred enough over to cover both purchases, one overdraft fee, and not have more than $20 left to take from an ATM.

  20. miborovsky says:

    Use credit cards…

  21. theDM says:

    Oh, and the worst part about the phone conversation was, at the end, the supervisor/manager person told me, “Glad I could be of service.” My response was, “Well, you shouldn’t be, because you weren’t.”

  22. wring says:

    hmmm I say go to a real bank, talk to a real teller, and you’ll have a better chance at getting it fixed.

  23. wring says:

    @theDM: also, you have to watch out for the calls you make to customer service, i heard they charge you for those too :P

  24. seeker1321 says:

    This is a little underhanded, use paypal to transfer the exact same amounts back into your account from another account. Then call Wells Fargo’s 800 number not the local branch, say that Paypal took the funds out by mistake and they realized their mistake and refunded your money. They should be willing to take the Overdraft fees off for you. Not sure if it will work but it may be worth a try. I feel your pain I was a poor college student too.

  25. Esquire99 says:

    @theDM: Really, all you need to do is stop talking/writing after “I made a mistake”. So because YOU made a mistake, Wells Fargo should bend their policies? It’s not something where you called them prior to and they said there would be no problem. You screwed up, you pay the consequences. It’s absolutely unreasonable for you to be angry with Wells Fargo for enforcing their policies that you were well aware of to begin with. It wasn’t some new policy they sprang on you. Chalk it up to experience and stop making Wells Fargo out to be some crook.

  26. Techguy1138 says:

    I had a similar experience with HSBC. I was driving cross country and my car broke down. I wont and got a hotel and paid a few cab services which all passed though. Then I had to make a series of local calls ,which from my hotel room required a credit card.

    I made about $8 in phone calls and wound up in overdraft at the end of it all for $6-7, that and 24 overdraft fees that combined to over $700.

    I was able to get some of the fees reversed because my parents had their mortgage and several accounts with them. That and my situation wasn’t one of reckless abandon but being stranded and needing to call the DMV, garages, hotels, etc.

    It still cost $200+. Overdraft fees suck. Banks get very rich from them and are loathe to give the money back.

  27. MystiMel says:

    I am bad at keeping track of what I spend on small things here and there. That’s why I use credit and then pay it off online from my bank account after looking at my balance online.

  28. hc5duke says:

    @bradg33: well said

  29. Yeah, I screwed up. But seriously, if the two payments go through at the same time, they charge you an overdraft on each one? That’s just sick.

    @theDM:

    Yes, they charge you an overdraft on each one and every bank and credit union does this. Changing to a credit union will not spare you from this. I’m kind of surprised you didn’t know this but I’m sure someone would think the same of some of the things I don’t know.

    This isn’t a “Wells Fargo sucks” thing. This is an “the way overdrafts work sucks thing”.

    @missdona: Um, wouldn’t the cash have to come from his Wells Fargo account? I’m not sure how getting $10 from an ATM to buy the stamp would have improved things.

  30. lettersnumbershyphens says:

    I remember the good old days–1967, when I was a college freshman with my first checking account–when I overdrew my checking account. . the next month I got my statement, with a -$12.00 balance, and a request to deposit funds to cover. Ah, the good old days! I thought they were pretty cool at the time, not to get all panicked about it. :-)

  31. bilge says:

    How about you suck it up as a learning experience?

    You made a purchase and didn’t have enough funds to cover the purchase. ING makes it pretty clear that money transfers take a few days and they can’t guarantee a day on which the transfer will post, so it was pointless to rely on that to cover your purchases. WF is being hardassed and unsympathetic, but they’re hardly scamming you or treating you unfairly.

    Now go get a rewards credit card, use it for everything, and pay off the balance each month.

  32. KittensRCute! says:

    ING Checking.

    you already have an ing savings account so i dont see why you dont just open checking account with them. they account comes with $165 of over draft protecting and the fees are VERY reasonable.

  33. JiminyChristmas says:

    This reminds me of an important lesson I learned when I was just a lad. You know that line on your ATM receipt that says Current Balance ? That doesn’t actually reflect the amount of funds currently in your account.

    Even better, now the receipts have two lines. One says Actual Balance. The other says Current Balance. They are often different numbers.

    Now, going by the common English usage of the words actual and current in this context a reasonable person might assume they refer to the same thing. They would be wrong, and that person would end up paying an overdraft fee.

  34. Secularsage says:

    Been there, done that, with Regions bank. What I loved about them was that they waited a week to inform you that you overdrafted and then blamed you for not checking your account daily.

    I think it was Clark Howard who said that banks should not be allowed to charge what often amounts to 1000% – 10,000% interest in overdraft fees, and I agree. These programs are set up to take advantage of people who don’t have a lot of money and who don’t manage it well — like college students, high school kids, twentysomethings and lower class people, all of whom can’t afford these ridiculous fees.

    Banks should be required to allow consumers the option to “opt out” of overdrafts by issuing electronic denials if an account is overdrawn. Most people would rather be embarrassed to discover that they can’t buy that soda with their debit card than get even poorer when the fees hit.

    As a side note, I have overdraft protection via US Bank, and I’ve never had a problem with them. You just have to be careful not to rack up lots of overdrafts, since they still cost $10 per pop. But that’s not as bad as $25-38 plus daily negative balance fees.

  35. hoo_foot says:

    Am I the only person who hasn’t complained to my bank when I have overdrawn from my account?

  36. star_ says:

    I don’t see a story here. The person messed up. The bank is just following the terms and conditions that the customer agreed to.

    I’ve had checking accounts for almost 30 years now and have never once had an overdraft. It didn’t take much effort to achieve that record.

    Please stop blaming banks for customers own mistakes.

  37. yg17 says:

    @MissJoanne: I disagree. I’m in college and have a US Bank checking account, and an HSBC Direct savings account. I keep enough in my checking account to get by (probably a bit more than that, just in case) but any excess money I have (basically, anything from my salary that doesn’t get spent on food or other things right away) gets dumped into my savings account. Why should it sit in my checking account making no interest when I can have it making over 5% interest? If I want to buy something, I can transfer it back over to checking, or just use my HSBC credit card and in internet banking, pay the card with my savings.

    The only regret I have about the OSA is not doing it sooner. For the longest time, I had over $15,000 in tuition/rent/random crap money sitting in a US Bank savings account earning 0.10% interest. I cringe when I think about how much I could’ve made off the interest in an OSA. Several hundred dollars over the course of my college years. Instead, it was in my US Bank account, where last year, according to online banking, the interest I earned was $17.43. In other words, half a tank of gas. Having that same amount of cash in my OSA would’ve bought me textbooks for a semester or two.

  38. AndrewJC says:

    I ran into this same issue several months back, even after working very hard to never have it happen again after college. Sometimes, when you’re living paycheck-to-paycheck (which I had been doing up until very recently), stuff like this happens.

    The thing that happened to me was literally a math error on my part. I think I had forgotten to carry a digit in my check register or something like that, so I thought I had more money than I really did. I don’t remember exactly. But what it amounted to was over $200 in overdraft fees, even though the fees weren’t processed until days after the money was debited from my account (I’m still really confused at that one, given that it was only the overdraft fees that actually put my account into the negative, thanks to a deposit I had made). Had you looked at my account activity, you would have wondered where the fees had come from at all.

    The *ahem* helpful lady on the Wachovia customer service line answered it for me in no uncertain terms: The debits to my account did not occur in the order in which they appeared on my account activity screen. Instead, they were processed all at once, come midnight, and they were processed from the largest debit down to the smallest.

    The reason behind this, if you ask the CS staff, is because they tend to assume that large payments are “more important” and thus process them in that order for your convenience. What it really does is enables the bank to charge you more overdraft fees than they need to. I’ll give you an example:

    You have $1,000 in your checking account. Let’s assume that you, for whatever reason, believe that you have more than that—say, a math error. On Tuesday, you buy gas at the pump with your debit VISA in the amount of $57. That day, you also mail out your rent check in the amount of $925. On Wednesday, you go grocery shopping and spend $80, also on your debit VISA (hey, you get points when you use it as a credit card), not realizing for whatever reason that $80 will overdraw your checking account.

    But wait. Since not all agencies report their credit purchases immediately, the gas doesn’t actually get submitted to your bank until Thursday. Meanwhile, the grocery tab was also processed on Thursday and hey, the check you sent for rent got delivered on Wednesday and was also deposited Thursday. Now, the bank will process your account once every 24 hours at midnight (or at least, mine does).

    Logically, one would assume that the bank would process these in the order that they were guaranteed by VISA (because that’s exactly what they were: guaranteed). In this case, the gasoline purchase would go first, followed by the grocery store, and then your check would be bounced, with, say, a $35 NSF fee—in addition to having to pay your landlord an NSF fee as well and negotiate how to pay your rent later on. This would leave you with $1,000 – 57 – 80 – 35 = $828.

    But the bank doesn’t see it that way. The bank would process your check first because it’s the highest amount. This would leave you with $75 in the bank. Well, that’s enough to pay for the gasoline, but alas, the bank will go to the next largest amount, which is the grocery bill. They will debit the (remember: guaranteed by VISA) $80 from your account, leaving you five bucks in the red. They will then tack on a $35 overdraft fee, putting you at -$40. Then, they’ll do it all over again with the gas bill, subracting $57 and leaving you with -$97, but wait! They get to charge you another overdraft fee! So what you end up with, instead of the $828 you’d have if they had processed the charges in order, you end up with a whopping -$132 in your checking account.

    And the bank is happy, because they got an extra fee out of it. I could have used an example much closer to what happened to me, which involved several small purchases (lunch, cigarettes, etc.). It gets truly ridiculous when you start looking at small purchases made with a debit card.

    Yes, the kid messed up. But the bank would have done far more for PR had they been willing to give some of that money back. I know that when Wachovia did that crap to me, I told them that I would never recommend any of their services to friends again and that as soon as I had the opportunity I was closing all of my accounts with them. Did I follow through on all of that? Not exactly—I’m still a customer of theirs, but only because all of the other area banks follow the same shady practices. But I will not recommend their services to anybody, no matter what.

  39. Buran says:

    @rgarcia979: They make it a PITA to use a credit card on purpose, I think. Probably they hate having to pay the fees like everyone else. Boo hoo.

  40. MonkeySwitch says:

    This is all banks :( I couldn’t even read through the posts.. this isn’t about spending money you don’t have, this is about being a poor kid (like myself) Sometimes you make that $15 gas purchase, and you forgot that you spent $6.50 at taco bell and you get a $35 freaking dollar over draft fee for the “convenience” of the bank covering that $1.50 that you over drafted. The bank has got your back, yo.

  41. Antediluvian says:

    Never, never, NEVER allow PayPal to touch your bank account.

    EVER.

    Only use PayPal with a credit card. PayPal screws up FAR TOO OFTEN to be trusted with real money.

    And make sure the credit card you do attach to your PayPal account has a moderate limit and that it’s a HARD limit — so you can’t go over it and be charged fees, but instead the transaction won’t go through.

  42. Antediluvian says:

    @yg17: Why should [extra cash] sit in my checking account making no interest when I can have it making over 5% interest?

    And this person’s experience shows you why. Because the fees for even a single overdraft can easily top $50 or even $100. Keep a couple hundred ($200-$300) extra in your checking account. You will not be earning enough in interest to offset your overdraft fees if you make a mistake.

    Even better, get overdraft protection — a short-term line of credit that covers you in case you DO overdraft. The hubby and I have 3 accounts, and so we have 3 lines of overdraft credit, I think for $1000 each. If one of us overdrafts, the bank automatically transfers money into the account from the line of credit (in $100 increments) to cover the difference. If you pay it off at the end of the month (rather than right after incurring it), it’s maybe $0.50 for the interest. Beats the hell out of $100 in fees.

  43. GearheadGeek says:

    @HungryGrrl: You say “Only start one of those if you a) keep enough money in your checking to cover monthly expenses and b) have enough money in a handy savings account to be a 3-months-expenses ‘emergency’ fund. When you have those two goals met, THEN open the high interest savings account.”

    Frankly that’s stupidly wasteful of the interest income you could be making off that emergency-fund cushion. You shouldn’t have it in a CD, as you’d lose the interest earned if you withdraw early, but if you have enough in checking to cover your regular expenses, you should be able to last the 3-5 days it takes to transfer the money back from a high-yield online account if you get laid off or something. Don’t cut your float down to a dollar or two, but don’t let the value of 3 months’ expenses languish in your friendly bank’s nice 0.2% “savings” account.

  44. Riuski says:

    I have an account with BoA, and recently had an incident where I realized that I could be about $70 in the red if I didn’t transfer fund immediately (a $3k check didn’t clear fast enough). So I transferred $500 from my BoA money market to the checking. According to the subsequent transaction logs, I wasn’t quick enough, as BoA charged me an overdraft fee, but then they also credited it back, without my ever having to communicate with them. As a matter of fact, the overdraft credit showed up before the actual overdraft charge…

    I guess it helped that 1)I had over $30k in the two accounts combined, 2)I have been a customer for more than 15 years, and 3)they noticed that I transferred the $500 the same day the checking account dipped into the red, and those online transfers between 2 BoA accounts are supposed to be “immediate.”

  45. Bob_McBob says:

    I still can’t believe the banking system in the US is so backwards. Here in Ontario, I have a free chequing account. Debit payments are denied (with no charge) if I have insufficient funds, or go through if I opt for overdraft protection, which is $5 for an entire month if I use it. All transactions are debited from the account balance immediately and instantly posted for online viewing. Bill payments are free. It’s impossible for me to rack up huge overdraft debts, and I always know EXACTLY how much money is in my account without having to keep some stupid paper ledger.

  46. pinkbunnyslippers says:

    Does anyone here GET the concept of not spending more money than you have? This isn’t brain surgery people! There is no “float” anymore.

    Quit whining!

  47. Antediluvian says:

    @pinkbunnyslippers: No, no one here gets that. At all.

    Of course people “get” that you’re not supposed to spend more than you have. But as was pointed out before, SOMETIMES human beings forget stuff.

    That’s why I offered two suggestions:
    1. Keep some padding in your checking account. A dollar you could earn in interest on that padding money in a savings account will be wiped out by the first overdraft fee on your checking account.
    2. Sign up for Overdraft Protection from your bank. Smaller banks, maybe CU’s, seem to have better options for this than the giant banks.

  48. dsnordyk says:

    @DM

    You can get these charges reversed!!!

    I used to bank at Wells Fargo when I was in college as well. A friend gave me a check that ended up bouncing, and I got knocked with over $200’s in overdraft fees from it.

    Here’s what you do. Go and speak directly, (in person), with the branch manager at your home bank. They and only they have the authority to remove these charges. Explain the situation to them in detail and how you thought that you had the money in the account to cover the expenses. The branch manager, (according to the one that I dealt with anyways), has the authority to remove up to 4 of these overdraft fees! Oh, and playing up the staving college kid angle helps as well.

    Again, GO TO THE BRANCH MANAGER AND SPEAK WITH THEM DIRECTLY, Wells Fargo will never remove these charges from your account over the phone.

    Good Luck!

  49. mookiemookie says:

    I don’t feel the least bit sorry. If you can’t be bothered to make sure you have money in your account before you spend it, then you have to expect the consequences.

    Yeah you can rail against how unfair it is that playing the float doesn’t work like it used to, but that still doesn’t take away from the fact that the bank didn’t do anything wrong. You received a copy of the account rules and regulations when you signed up for the account, and its all spelled out in there.

    Any financial institution is going to do the exact same thing that Wells Fargo did in this situation. Let’s be honest with ourselves, you’re not mad at Wells Fargo’s “unfair” policy, you’re mad because you screwed up and they’re not going to bail you out. Looks like you just had your first lesson in “Personal Responsibility 101″.

  50. theDM says:

    Thanks guys… a lot of this advice I do need. For the record: My Wells Fargo Account is now just a temporary holding place for checks I can deposit, with a little emergency cash that I realy wish I didn’t have to put in there. I’ve opened an ING checking account. I’ve put all my accounts with Mint.com. I’m in the process of talking to ING to see if they’ll re-comp me for one of the overdraft fees (they helped me out of a little trouble a long while back, so I’m just going to see). I’ve changed my Paypal to connect to a Credit Card (AmEx Blue for Students. Not the lowest rate, but I always pay it off).

    To those who say “Oh, that’s just the way it is.” That’s not the point. The point is it shouldn’t be like this. You wou;dn’t stand for Doctors who said, “Oh, I know I had you in an appointment for today for surgery, but turns out we have to wait till tomorrow.” You wouldn’t stand for a restaurant who said, “I know you ordered you food five minutes ago, but we won’t have it until after the weekend.” You wouldn’t stand for this in any other profession- why banks?

  51. Sam Glover says:

    I’ve had very good luck getting multiple overdraft charges reversed. If you have a record without many overdrafts, they will usually reverse some of them over the phone. The best way, however, is to visit a branch and speak to a banker (not a teller) and explain the situation. If you acknowledge fault but point out that ~$100 seems a pretty steep penalty when the funds were on the way, they may take mercy.

  52. theDM says:

    @pinkbunnyslippers: see, it was a small math error. I hadn’t accounted for shipping right away, and so I only overdrew by $2-3.

  53. Mary says:

    @Don Roberto: “Or at least, if they insist I login with my account, then make it patently obvious which funding source they’ll suck money out of.”

    Paypal might not be a perfect system, but they ALWAYS tell me exactly where my money is coming from. It says “primary funding source” on the page, and then “back-up funding source” (or something similar) because I have a back-up set up. I then have the option to change those to any combination I want.

    I realize you don’t use paypal often, so you might not have noticed this, but it’s right there on the payment page.

  54. rmz says:

    Disable overdraft protection. The feature is voluntary, after all.

    Problem solved?

  55. mac-phisto says:

    @theDM: the electric checking is awesome, but beware! if your whole point of the orange account is to save money, the electric checking is going to make that harder – not easier. i would recommend setting up an account at a local credit union for everyday spending & ONLY use the electric strictly for school expenses & emergencies.

    as a student, i think you’ll find that a credit union meets your needs more than a large bank.

  56. Anonymous says:

    In order to be the devil’s advocate I have to say the position you’re in is all your fault. That probably makes me already one of the most hated people under the comments however, people should become more educated about their bank accounts. Honestly everyone should know that funds from checks aren’t available immediately, online transfers from different banks to banks can take up to a couple of days. However OD is something which is extremely difficult to pass by, even for employees. During training, it is emphasized that ODs cannot be reversed even for employees.

    In all honesty, yes ODs suck, however there is overdraft protection as ANTEDILUVIAN mentioned. Also over draft charges differ from fees.

    Overdraft charges are charged to your account everytime your account is overdrawn and you are still using your debit/check card. Fees are minimal and usually are $3 and are for everyday you’re in overdraft. Usually they escalate to something known as Level 2 Continuous in which you’re charged everyday if you leave your account overdrawn. Typically the charges are around $34.

    I’ve had my account overdrawn several times and I’m in college as well. Most of the money I make goes back into school so I don’t have alot of money for myself. However early on I got into a hundred dollars in overdraft fees and I learned my lesson, the hard way.

    Either way Wells Fargo is still at fault for not properly training you on what everything means on the website and in store, however you should realize that “Pending” is pending, as in the transfer is still clearing.

    In reality, Wells Fargo is a actually a great bank. We do alot to protect customer’s account, more so than any other bank I’ve banked at. How do I know? Because I’m an employee. Yes I do hate some policies they have, however most of the frugal policies we have are there in order to keep your account safe.

    As a lot of people have said before, you can speak to the branch manager who has authority to remove charges. Anybody else will NOT reverse the charges even if they have the authority because A) they’re not the branch manager B) the branch manager is usually dealing with the personal bankers and walking to and from the teller station to the Branch manager’s office is usually not allowed due to customer traffic if it’s busy.

    In all honesty, just because you’re ignorant of a policy does not mean that everything can be fixed.
    In your case, an immediate transfer cannot be done because Wells Fargo has to check that the transfer is legitimate and abnormal. Wells Fargo is a bank, they’re there to hold your money and make some money, and its ODs that help out.

    Wells Fargo does charge a bit more than other banks, however I still think they’re a decent bank. I’m not sucked into corporate BS, but knowing someone close that used to work at a rival bank, Wells Fargo’s policies are indeed awesome. Even though it’s more work for their tellers.

  57. olegna says:

    I love it when consumers post on a consumer protection website defending banks’ sketchy system of posting and debiting by saying “well, if you didn’t live paycheck-to-paycheck it wouldn’t be a problem would it — tsk-tsk on you!”

    This is the equivalent of when conservative chickenhawks say that if you don’t have anything to hide then you wouldn’t have to worry about the government secretly tapping your phone lines.

    The point is: the banks policy, whether you live paycheck-to-paycheck or not, is sketchy. I’ve had 7-11 debits not clear for up to two weeks. For two years I deposited the same paycheck from the same local employer using another local banks, and every time it took three days for the paycheck to clear.

    At the same time, the debits clear based on the VENDOR’S discretion not the consumer’s.

    I don’t live-paycheck-to-paycheck anymore, but I share this person’s frustration from a time when I did.

    I often wonder why in this day and age of paperless transactions and instant communications among banks why they “conveniently” have set up delays on deposits while at the same time most debits (but oddly enough not all) are instantaneous.

    PS: I’ve heard the explanation over and over again and I disagree with it. The issue is that the banks make money of this odd system, and if they fixed the system of making communication among banks so that account verification — to make sure the money is available to transfer doesn’t take 2-3 business days — is faster, they wouldn’t be able to charge as many O/D fees. So why would they fix this problem unless the FTC finally sided with the consumer for once on banking issues and tells the banks they have to clear deposits faster, or process debits from LOWEST to highest rather than HIGHEST to lowest — which is a completely arbitrary choice based on which one will increase the likelihood of an OD fee, PERIOD.

  58. aikoto says:

    The overdraft system is a scam. You’re right to abandon them and go with a credit union. Make sure they have decent policies for when you go under. No one should be pounced on so hard just for making an occasional error.

  59. exkon says:

    I’m feel a little sorry because I know how hard money can come by when going to college. But its really is his own fault like he said. An overdraft fee isn’t really a “one-time” thing. If you really think about it makes perfect sense that once you’re in the negative that you get CHARGED for each subsequent purchase you make while you’re in the RED.

  60. NoWin says:

    Re: BY THEDM AT 10:17 AM…”To those who say “Oh, that’s just the way it is.” That’s not the point. The point is it shouldn’t be like this.”

    Bad analogies aside; but No. The point is you knew better, and to make it worse, you knew the rules from before (“once bitten, twice shy” should have been your mantra).

    If you don’t want to accept the rules & regs you agreed-to, then don’t try to force the system after the fact.

    I know having and TAKING responsibility is hard enough for anyone, and maybe financial responsibility is harder-still for many younger people, but this is a case where the bank wasn’t the wronging party.

  61. hals000 says:

    wells fargo will usually “waive” overdraft fees that are under a dollar so i wouldn’t worry about the stamp. and i have had a LOT of overdraft fees reversed, its easy to do, you just have to talk to and/or know the right people.

  62. RebekahSue says:

    @DOMROBERTO

    Anyway, why can’t they just let me enter a credit card number and click pay? Or at least, if they insist I login with my account, then make it patently obvious which funding source they’ll suck money out of.

    You can set up your credit card on Paypal. I’d rather use my checking account, but there
    have been times that I needed to pay for something and was waiting for funds to come
    my way, etc… it does work.
    Paypal is far from perfect, they’re subject to counterfeited spamming, AND they send a lot
    of email I don’t want. If you look, though, it does list what account your payment is coming
    from as long as you recognize the last four digits of your account(s). [It’s also far more
    commonly accepted, so far, than the google pay system.]

  63. mac-phisto says:

    @olegna: i understand your post, but a lot of your frustration is unduly placed on the bank.

    1) funds availability is regulated by the governing body of the central bank of the united states – the federal reserve board. regulation cc deals with availability of funds – you can read about it here (click on CC in the header to find info on the regulation) –>[www.federalreserve.gov]

    the check 21 act has made the processing of physical items much faster (items can clear anywhere from 3 – 24 hours), but it is not mandatory for financial institutions to make the switch. once electronic processing becomes the standard for the industry, the frb will adjust their availability guidelines (& banks will follow). until then, reg cc is needed to mitigate risk (contrary to what you might believe, A LOT of checks bounce – including payroll checks. they are by no means “guaranteed funds” for deposit).

    2) the VISA network is largely responsible for the lag time concerning purchases made with a debit card. PINed transactions are almost always posted to accounts same day or next day. transactions that pass thru the VISA network (for example, swiping your card at the gas pump WITHOUT entering your PIN) are often subject to a hold period (usually less than 3 days). posting can take even longer if a merchant doesn’t report their credit card sales to VISA on a daily basis. VISA is a private network & they make the rules (not the bank), so the chances of the ftc doing anything about it are pretty slim.

    most people don’t understand that when it comes to items that clear your account (credits & debits), a bank is just the RECEIVER. another bank tells them to credit or debit & when to do it, all they do is post it when that date/time comes. they don’t actively manipulate posting items just to make a few bucks. the posting process is completely automated.

    BUT, a bank’s policy should be to work with a customer. fees are ALWAYS reversible (losing a customer for life usually is not), it’s just that the incentive is rarely there to do so for a college kid or a person living paycheck to paycheck. throw a 100K or two in most banks or book a 500K+ in loans & watch how quickly that changes. not only will they reverse all your fees, you’ll walk out the door with a t-shirt & a george foreman grill!

    banks ALWAYS make exceptions…it’s just a question of who they’re making them for.

  64. muckpond says:

    @MonkeySwitch: who spends $6.50 at taco bell? :P

  65. RebekahSue says:

    p.s.
    The OP might want to consider keeping his/her accounts i a spreadsheet. I’m far more likely to open Excel (or, depending on which computer I’m using, OpenOffice) than I am to look at the little booklet with my checkbook. If you’re writing to the Consumerist and not to the bank, right now, you may think like I do.
    If you DO get helped, PLEASE send the bank a quick thank you card. Via US Mail, with a stamp. I can’t tell you how much my bank bends over backward to help me, ever since they realized that I’ve been copying complimentary notes (my checking account has been compromised) to their Personnel department.
    The decision to remove your fee, or not, will be made by an individual.
    The fee probably shouldn’t be removed. If a person does you the favor of removing a fee caused by
    (1) your not checking your balance and
    (2) ING’s transfers not being immediate (or, in this case… transferred five days too late, considering that they take five days to go through),
    you OWE thanks. This wouldn’t be his or her “doing their jobs” but “going above and beyond.”
    I’d strongly suggest that thank-you. it will be a more important lesson than those fees, especially if you go into the business world.

  66. kelbear says:

    No, it’s a scam plain and simple.

    If there isn’t money to be withdrawn from a debit card, the bank should just not take money out of the account. The payment doesn’t go through, and a purchase isn’t made. Thus the cardholder knows he’s got a problem and doesn’t overdraw and gets money into his account first.

    But that’s not as profitable as processing it and charging an exorbitant fee. That’s the reason it defaults to just withdrawing instead of rejecting. So say a stick of gum, a burger, and a piece of paper costs about 200 in overdraft. Good for them, bad for you.

    Call them and have their overdraft “service” deactivated. That, or pay with credit cards only, never pay with debit.

  67. theDM says:

    @NoWin: They’re not bad analogies. Business is business.

    @exkon: But shouldn’t it be a one-time thing? Especially if both purchases post at the same time since I bought both of them on a weekend?

    oh, and for the record, I was assessed an overdraft fee (34$) for the stamp.

  68. exkon says:

    @theDM:
    I guess if you argue your point it could be a “one-time” fee but its still two separate purchases. I don’t work for the bank or anything, but I have a friend that does.

    Though I know its a harsh fee, but its really to deter people from overdrafting or telling be more careful with you money.

    Which would you rather have: an overdraft fee or your card getting denied?

  69. theDM says:

    @exkon: card getting denied, every time. I’d rather be denied and have to go to a Credit Card (especially since I know I have money in a savings account) than have to pay $34 for a $.41 stamp.

  70. NoWin says:

    For a small insight (layman friendly verbiage) at what a portion of item-processing entails from the bank side can be seen at this weeks topic entitled: “Bragging Rights” at [www.Gonzobanker.com]

    Disclaimer: I have no affiliation with that website, but I do read it regularly.

    Knowledge is power. Use it wisely.

  71. vZa says:

    as a former WF customer during my college years, i’m unfortunately very familiar w/ this little routine. i was disconnected more often than i was able to actually speak with a manager. heads up, you’ll probably be charged a nominal fee for calling the phone banking line.

  72. Anonymous says:

    Wells Fargo lost my business recently for similar reasons. If they’re going to treat withdrawls as instantaneous, they need to treat deposits and/or transfers the same way. It seems to me that withdrawing money from one account and delaying the transfer/deposit to another account constitutes unauthorized borrowing. I don’t believe that the bank should be holding on to money that isn’t – technically – in their clients’ accounts. “Pending” drives me crazy. That and Wells Fargo charging $2 for using a non-Wells Fargo-branded ATM. On top of the $1.50 (Costco) to $5.00 (Las Vegas) ATM-specific fees.
    I’m now a member of a credit union in my area that allows me to avoid ATM fees at any of the numerous credit union ATM’s in my area. They also have a great – and FREE – overdraft protection feature. Overdraft protection is a joke at Wells Fargo.

  73. jesirose says:

    @Don Roberto:
    They can. If the account you’re paying is merchant or business, they accept cards for free. If it is personal, they will be charged. You simply do not log in to paypal when paying, but use the credit card form below the login screen.

  74. UpsetPanda says:

    @kelbear:

    As much as we hate paying for the OD mistakes we make, what should they do? Not charge for overdrafting and continue to let people overdraft and charge things on their accounts without penalty? One could argue that the people get penalized by spending money they do not have, but since when do people really, truly learn from that?

    Also, I highly advocate padding an account. Keep as much as you can in high interest savings, sure, but don’t keep only $300 if you intend to spend $299. You never know what might come up and you never know how long things take to transfer. Keep enough money in there for any likely situation (and perhaps a few unlikely situations).

  75. ppiddyp says:

    FYI, this varies from bank to bank. With my bank (TCF) the overdraft fee was posted at midnight, so you were cool with an overdraft and then a quick transfer after the fact. Back before I was, like, employed that was really nice.

  76. SmoovyG says:

    Am I the only one that remembers when overdraft protection meant the bank would float you the extra cash without a massive penalty provided you took care of it within a day or two?

    I agree that you should watch your balance. That’s all great but it doesn’t excuse the fact that the penalties levied against the customers far outweigh the customer error the vast majority of the time.

  77. daewootech says:

    dont be too hopefull, im with alliance credit union and even though i deposited my check on a wednesday through thier atm, and the money DId show up in the account it wasnt available until jsut about a week later(for example it says accout balence $2500, available $40), so a weeks worth of purchases(about 8 purchases) got overdrafted because apparently “ATM’s dont go through immediatly” i understand that, but a whole week, with my money sitting in my account but not accessable? thats a crock of sh!take

  78. mrearly2 says:

    At my bank (BankAtlantic), transfers (savings to checking or vice versa) are instant, so there’s no worries about when the tranfer will post.
    Overdraft fees are excessive and a ripoff–it doesn’t cost the bank anything to advance a payment–no money is involved (there is no money), only electronic credits.
    Just remember–the whole banking system is based on fraud.

  79. Iwonian says:

    DM might want to consider signing up for Wells Fargo’s new Teen Checking Account.

    According to the Ironwood Daily Globe ([www.ironwooddailyglobe.com]):

    The account, for individuals ages 13 to 17 with an adult co-owner, combines: financial education, parental controls such as daily spending limits on debit card purchases and ATM withdrawals, money management tools and account alerts.

    “The Teen Checking account is the driver’s permit of checking accounts,” said Susie Boxer, Wells Fargo Community Banking president in Houghton and Ironwood. “Before we let teens set out on the open road, we make sure they have adequate skills, supervision and practice to make good decisions behind the wheel. The same is true for a checking account. Teens need guidance and an understanding of the responsibility they’re undertaking.”

    I understand it’s for ages 13-17, but DM’s daddy might be able to finagle it.

  80. Anonymous says:

    Here is a story for all my American friends. I am Canadian and in the last while have spent more time across the border in North Dakota. Great deals with the exchange rate.

    So I decided that a bank account with a big US bank (Wells Fargo) would be a good idea. Mainly to get a US credit card. Since I had no credit in the US, Wells Fargo gave me the option to take $300usd of my money and give me an secured credit card with a $300 limit along with a checking account. 12 months later they would look at my history and I could then be eligible for a un-secured credit card. Well 12 months went by, I was perfect with the card and I called. They said sorry you have no credit history. I said “yeah, hence the 12 months of you holding onto my money and creating a credit history”. Sorry.

    So I decided to kill the credit card and keep the checking account since the debit card works like a Visa also.

    Well my wife and I are building a house and decide to head down south with $1150. I deposit it into the branch in cash. We spend a day, I use debit where I can and on occasion they swipe as visa. All good. Wrong. A few days later I get this call on my cell saying I am $500 overdrawn and have to make a payment ASAP. I was like, “What The …” I check the online banking and see that I was 153.13 overdrawn and had $302 in fees. I sent a check for the 153.13 asap and told them they will not get any fees from me and close the account.
    10/10/07 DEPOSIT MADE IN A BRANCH/STORE #16151872 +$153.13
    10/04/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    10/03/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    10/02/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    10/01/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    09/28/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    09/27/07 CONTINUOUS OD LEVEL 2 CHARGE $5.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00
    09/25/07 OVERDRAFT FEE $34.00

    Balance Due $302.00

    14 days overdrawn and they expect to get 200% of the overdraft amount in fees. Good luck!

    I though we got screwed in Canada, no way. They nickel and dime us all year, but charge very little when it comes to overdraft. Average here is $5.00 overdraft fee per month and the daily interest until paid. With a $4 a month bank account.

    I guess Wells Fargo makes the good customers pay for the bad ones.