Banks Earned $19 Billion From Overdraft Fees This Year

Overdrafting makes the Consumerist very sad, and banks very happy.

Kiplinger says that banks have already hauled in $19 billion this year in overdraft fees, and are quickly moving to amend policies that are attracting threats of regulation from the government.

Overdraft fees have morphed into a big money-maker for lenders, exceeding $19 billion this year — up 85% from 2004. Banks charge as much as $35 for a check, ATM withdrawal or debit purchase when funds to cover them are lacking, even if it’s a $2 cup of coffee that puts a customer into overdraft territory. The sharp increase in total fees is largely due to two factors: The increasing use of debit cards and the fact that many banks automatically enroll customers in overdraft programs without them knowing about it.

Banks say that they will start including more disclosure and “a requirement that consumers “opt-in,” providing written consent that they want overdraft coverage and agree to the fees.”

They’ll also offer less costly options when consumers open an account (such as linking the checking account to a savings account), program ATMs to offer warnings, and employ tiered fee systems in which the first overdraft might be waived but each additional overdraft would incur larger and larger fees. Will they really do what they say? Reply hazy. Try again.

Consumers to Get Some Relief on Overdraft Costs [Kiplinger]
(Photo:FastFords)

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  1. ajn007 says:

    Frankly, it isn’t overdraft fees the bother me as much as transaction fees. People should learn to keep track of how much money they have. But being charged for services that do not even require the use of a human, or require a human to do as little as press a button, THAT is BS.

  2. Anonymous says:

    my bank took the overdraft off of my debit card so at least now i can’t spend more than i have in there. even one penny more and my card gets declined. like old fashioned times lol.

  3. remusrm says:

    track what? how can you track when nothing is right on their website… holds on direct deposits… etc… get WAMU and then see what I am talking about. They suck. I got now Citibank is better of showing my spending, but still has some quirks…

  4. serreca says:

    And here come all the holier-than-thou “keep track of your money and you wouldn’t have this problem!” people. Barf.

  5. remusrm says:

    oh, not too mention you can not turn off the overdraft… i tried with 4 banks… bofa, wamu, wells forgo and citi… they do it out courtesy and save you the embarrassment… bull shit… is to take your money.

  6. Steel_Pelican says:

    $35? Try $70. Wachovia hits you once for $35, when the transaction is approved (when the card is swiped) if you can’t cover it. Then they ding you again for $35 if your account can’t cover it whenever the bank gets around to processing the transaction.

    @ajn007: “People should learn to keep track…” I agree, but banks have changed their transaction processing practices to maximize overdrafts. They’ll hold deposits for unpredictable amounts of time (I once had a paycheck held for 10 days, and no one could tell me why), and process transactions in the order that generates the most fees, instead of the order that they actually happen. Like many people, I use an electronic check register to track my transactions. But since you never know what order the bank will process your transactions, (or even on what day), check registers become useless, and it becomes nearly impossible to keep track.

    The only way to truly protect yourself from this nonsense is to have a large enough “cushion” in your checking account to allow the banks to play games with your money. But for many of us, that’s just not an option.

  7. Gev says:

    @Steel_Pelican: No, the only true way to protect yourself is to keep track of your transactions yourself and to never trust what your bank tells you your balance is.

    My bank plays the same games everybody else’s plays but if my check register says I don’t have the money, then I don’t have the money, regardless of what the ATM receipt or bank website says.

  8. JustAGuy2 says:

    Why are you people using debit cards? For pete’s sake, use a credit card, and avoid all this hassle entirely. Pay 1 bill, pay it exactly when you want to, and have a ~28 day window in which to pay it.

  9. Odwalla says:

    @remusrm: Using a bank’s website to see your account balances is not the same thing as tracking your money. Get some personal finance software and keep the ledger up to date, entering in each deposit and withdrawal you make.

    Or even, gasp, do it the old fashioned way and keep your check register up to date. Just do something where the bank isn’t involved. It’s your money, not the bank’s. You should be responsible enough to know how much you have at any point in time.

  10. SaveMeJeebus says:

    I just stopped checking the online transaction history until my bank (USAA) got it to be “live” a couple years ago. Even with that, it is still not to be as trusted as the trusty ol’ register. However, I can see where people, albeit a small percentage, have overdraft issues when paychecks and large deposits are held in limbo to clear. If you don’t know it is going to be held, then you are going to be screwed and the bank won’t do you a true courtesy of telling you that you are racking up massive overdrafts.

    You can’t tell me that a similar percentage of consumers would have overdrafted like this 10 years ago as they do now that this “courtesy with a fee” overdraft BS started. I will give kudos to the think tank that developed this idea of sustained, increased revenue though.

  11. emona says:

    WaMu holds my direct deposit every month. It goes in at midnight and doesn’t clear for a day. I auto-pay my bills, use my debit card and watch my bank balance get deeper into the red. Transactions clear before the DD, but no overdraft fee in sight. Plus, they give you one NSF a year free and a debit card that earns 3% cash back AND Wamoola for free.

    Not bad, considering some of the stories I’ve read.

  12. Steel_Pelican says:

    @Gev: What happens when your check register says you have the money and the bank says you don’t?

  13. anatak says:

    @JustAGuy2: riiight, because credit card companies never try to nail you with fees.

    @serreca: You forgot about the holier-than-thou credit card contingent.

  14. fargle says:

    Until a few months ago, my wife and I were living on debit cards and using the Wells Fargo online banking to keep track of our balance.

    We noticed a funny thing though – near the end of my pay period, when the balance started getting low, Wells Fargo seemed to start sitting on transactions longer and longer and not posting them to the site or taking them from the available balance.

    So we did some experiments: let the balance get low and run some transactions through. All were online (not paper, but using a terminal) from major retailers. And guess what? A few didn’t show up for 3+ days, during the week – not over the weekend.

    So can I prove it? No. But would I be shocked if there isn’t a nice algorithm inside a lot of bank systems that holds transactions so that you go over your limit more often? Again, no.

    Now I take out $200 from the ATM at the start of every pay period and use cash. No more overdrafts.

  15. shaneml98 says:

    USAA.com for anyone who has ever been in the military or directly related to someone in the military, it is the best bank in the world. They give refunds for ATM transactions, great interest rates on loans, GREAT CUSTOMER SERVICE, and just generally nice to deal with. I have been with them for 7 years and have my car loans, mortgage, and just about everything else through them. Highly recommended.

  16. AnnC says:

    I don’t think banks “earned” the money; they didn’t do anything to earn the money. It’s better to say they charged/billed/received/collected the money.

  17. Geekybiker says:

    Banks absolutely hold transactions as long as possible in order to apply them in such a way as to maximize fees. I have enough cushion now, but 5 years ago or so when I didn’t I noticed some really long holds. Particularly on larger transactions and then they would all show up at once.

  18. ab3i says:

    I am probably going to get flak for this, but if one MUST use a Debit Card / check, isn’t it just easier to keep a small buffer amount .. say something as low as 200$ even in your checking account at all times to cover these instances?. I prefer to use credit cards, and even then make sure I never go over what I have in my account to cover the charges. simply putting it, don’t spend what you don’t have, and keep a buffer for good measure. Also, I am not taking the bank’s side on this, just advocating another option.

  19. workingonyourinvoice says:

    I just closed my capital one account because of this. I’d had the account for less than a month, and transferred a large amount of my last paycheck to another account. The transaction was processed so slowly that I had no real indicator how much money I truly had. I ended up with 8 overdraft fees at $32 a pop, plus the debits, and just had to withdraw $250 from the other account to cover it all and get back to a positive balance. After taking care of that, I went to the counter and asked if there was anything they could do about the fees since I was a new customer and really couldn’t afford the loss. He told me there was nothing they could do, but he DID offer to open me a $2500 personal loan as “overdraft protection” that would deposit $100 into my checking account for each transaction posted against nonsufficient funds. What a fucking joke. Back to the credit union (it’s just 20 miles away from my new apartment).

  20. bbbici says:

    I never understand why people use debit cards. Use cash or credit cards, period.

    If you are buying a big ticket item with a cheque (rent, car, etc), it doesn’t take a genius to know that you should check your balance first.

  21. JustAGuy2 says:

    @anatak:

    No, they don’t. So long as you don’t go over your credit limit (which is much less likely than going below your zero balance – who has more in their checking acc’t than they have as a credit line on their cards?), the most you’ll ever pay in fees is ~$35, and that only if you pay late.

    So, yes, while neither medium of payment has zero risk of fees, the chances of being hit with high levels of fees using a debit card are far higher than with a credit card. Bottom line, the credit card company will loan you money interest-free for 1-2 months, with no fees. Your bank is not so generous.

  22. Xerloq says:

    @Gev: @Odwalla: So what do you do with the old fashioned register when you show you deposit a $1,500 paycheck on 10/1, bringing your balance to $1,650 (in you ledger). You pay your mortgage $1,525, buy some groceries $25, and pay some bills $50, all on 10/5. Your ledger says you still have $50, but your bank holds the deposit for 10 days, and charges you three $35 overdraft fees.

    It happens.

  23. mac-phisto says:

    you know, the more i think about this, the more i don’t know what to think. smaller banks (local chains & savings banks) & credit unions generally have less rigid policies on overdrafts & lower fees. this is b/c their smaller customer base requires them to cultivate relationships. meanwhile, larger banks don’t care about relationships b/c their selling point is convenience.

    at some point, if you are banking at a large institution like bank of america or wachovia, you have to understand that they really don’t care about you. bank of america has almost $700 billion in deposits – 10% of the total amount on deposit in all u.s. banks. you are simply part of a ROI calculation to them, regardless of the size of your account. is it really their responsibility to keep track of your available balance?

    conversely, where i bank (a small credit union), overdraft fees are half what they are at large chains. they don’t charge fees if you’re only overdrawn “a little bit” (under $15) & if you deposit money to cover your overdraft on the same day that it occurs, all your fees are reversed. bank of america can’t hold a stick to that policy.

    my point is that making larger banks “more friendly” to the consumer makes local banks & credit unions less attractive overall, which in turn makes the playing field grossly uneven. if you want service, go local. if you want convenience, learn to balance a checkbook & quit yer bitchin.

  24. -J- says:

    @STEEL_PELICAN, you are absolutely right! I am having the same experiences with Wachovia as well. $1000 of that $19 billion has been my own money stolen from that bank. Mind you, I have had an account with Citizens Bank for just as long with another account, never a problem. Also previously I have never had this many overdraft fee’s with the same type of usage on my accounts as I did with Wachovia. Their entire reporting system is unreliable. I check my balance and transactions each day. Checkbooks don’t matter as they don’t process transactions in order, and sometimes you don’t find out about autotransactions until days later online as they don’t apply them in order either. The ONLY solution is to have at least $500 in the account at all times, then they pretty much have to leave you alone. Not all of us have that luxury.

    @Gev and the like, yes you are right. However, when the environment for keeping track is made impossible, what do you do then? When you have bills to pay that don’t wait for your bank to decide to cash your incoming paycheck at will, or worse, when Wachovia has the paycheck in hand and waits for incoming transactions, and postdates the amount applied to the account days before a day AFTER all outgoing transactions are made from greatest to least so that it inflates the occurrences of overdraft fee’s, you are set up for overdraft fee’s from the start.

    That is the difference Gev. Wachovia, and a few others exploit the way they have been allowed to process transactions to maximize overdraft fee’s with recent law changes. That is how the industry pulled in an extra $19billion suddenly this year. it’s not made of a sudden miraculous increase of 542.8 million some odd overdraft’s at $35 each. (do the math) It is because they have in fact set things up to artificially inflate overdraft occurrences to collect on the fee’s. How else do you think the fad of free checking suddenly is no longer a fad? They realized they can make much more money doing this.

  25. -J- says:

    @Xerloq:

    indeed, it happens all to often.

  26. Steel_Pelican says:

    @ab3i: Good advice, but a $200 buffer in the checking account is a level of wealth that a lot of us don’t have, especially those of us who are struggling to get out of debt.

    And for the “learn how to balance your checkbook, dummy” crowd, I’ll echo the sentiments of many commenters here: you can only rely on your ledger when you have a good understanding of how your bank process transactions. How reliable is your ledger when you date your deposit as 10/5, and your bank dates it as 10/12?

  27. wring says:

    @fargle: holy shit I kind of noticed that w/ my credit transactions. this is why i use debit as much as possible, at least it’s debited the next day, on the clock. very interesting observation.

  28. -J- says:

    @wring: Yes it is good advice and works…sometimes. Sometimes the transactions is posted same day, sometimes a day later, sometimes not until the following Monday or Tuesday. We should not be having to jump through such illogical hoops to keep track of anything in regards to our money. It used to be I could rely on my bank to process transactions in order so I can keep track of them. Process auto-debits on the day they are charged from the various companies I may have auto-debit (or is required by some now such as Verizon FIOS).

  29. Wow . . . just wow.

    Having never experienced this kind of forced overdraft situation, I’m quite literally sitting here with my fingers crossed hoping my still small-ish local bank doesn’t get bought out by one of these national goliaths. I’ve grown accustomed to having my paycheck thoroughly deposited each Friday by the time I get out of work and start debiting rounds at happy hour :)

  30. ab3i says:

    @Steel_Pelican: Point taken. Debt is messy business.

  31. mac-phisto says:

    credits are not really as difficult as some of you are making it out to be. the key to not getting screwed is to educate yourself.

    if you don’t want to educate yourself, then you might as well stop reading here. for everyone else, here is the federal regulation governing funds availability that all member banks of the federal reserve MUST follow:

    [www.federalreserve.gov]

    in addition, your bank is required to make a copy of their funds availability disclosure available upon request. here’s an example of bank of america’s funds availability policy (in pdf) found on their website:

    [www1.bankofamerica.com]

    if you notice, bank of america’s funds availability policy is almost identical to the one on the fed site. shocking, isn’t it?

    banks don’t “make up” when they decide to process deposits…not legally anyway. fleet bank (now part of bank of america) was holding government checks against the law in connecticut & paid a pretty stiff penalty a few years back.

    manipulating holds is not as easy as some people may think. computer systems decide how long to hold items based on preset criteria that must conform with banking regulations. period. any deviation from that makes banks noncompliant with the regulation, resulting in penalties that include fines & could include jailtime.

  32. dwarf74 says:

    I’ve kept a $200 cushion in my account for about a year now… Honestly, I don’t know what I’d do without it.

    I don’t think anyone’s denying that a bank should charge a fee if you overdraft. Taking big transactions before small transactions (when they’re covering all of them anyway) is shady as hell; and the dollar amounts of the fees are unrealistic. In no way, shape, or form did your overdraft for a pack of gum cost your bank anywhere close to $35.

    “Know how to manage your money!” doesn’t address the very real problem that banks are predatory in regards to overdraft fees.

  33. cfangster says:

    I called to “upgrade” my Chase Freedom Visa card to Visa signature card, and was told the only difference is that with Signature card, they would not be able to charge me for overdraft fee and it is not worth the trouble. Now I can see why they tried to persuade me not to “upgrade”.

  34. Odwalla says:

    @Xerloq:
    The solution is pretty easy. If you know the bank is going to hold your deposit for n days don’t make withdrawals against that deposit for n+1 days. While you are waiting for the money to clear you could spend your time finding a bank or credit union that doesn’t have such abysmal hold times on deposits. If you’re really living so close to a $0 balance all of the time that your money is going out as fast as you bring it in you need to improve your money management skills.

  35. wring says:

    @-J-: Ack I hope that auto debit doesn’t catch on. So far I only have my netflix as auto debit. I don’t trust my bank or myself enough for all my bills to be auto-debited.

  36. SaveMeJeebus says:

    @mac-phisto: On the pdf link you posted, BofA clearly states that they may deviate from the normal next business day funds availability if you have a history of overdrafts. There’s the answer to that nagging question. Now we just need to know what came first–the overdrafts or the held deposit =)

  37. protest says:

    hey maybe the government could start capping and taxing those overdraft fees and use the revenue to bail all those subprime mortgage victims out? just a thought.

    after i had first found out about this whole overdraft fee thing on debit cards from this site, i called up my credit union and specifically asked the csr “what happens if i use my debit card and i don’t have enough money in my checking acount to cover it?” she told me “it will be declined, the only way it wouldn’t be is if you told us to use your savings account as an overdraft.” i say i love my credit union.

  38. Rob Phelps says:

    I just turned off my overdraft ‘protection’. Apparently, the insufficient funds ‘fee’ for MasterCard and other non-debit transactions is the same as an overdraft protection fee, except the transaction is bounced. So I guess the whole idea is to cover the money for you, charge you the same amount, so that your bills go through instead of them getting returned/bounced. But if I just stick to debit for purchases, those will get declined at the POS, and not charge me anything. As far as bills/rentchecks go, I have to manage that myself, but that’s OK, because everything in my account besides bills/checks that haven’t processed yet will be updated live (since they’re debit). I think.

  39. no.no.notorious says:

    I think it would be fair to impose an overdraft fee if someone is in the red for more than 5 days over $30. That will give a couple of days for checks to clear and enough time to be notified that you are in the red. I also think that $30 is a reasonable cousin for all those nit picky things that make people go into the red anyway. I know this would probably never take place (because it’s sort of logical) but in a perfect world, it could work.

    I myself have been slapped with an overdraft fee twice, but both times were under $10.

  40. Raziya says:

    I am glad our local bank (Merchant’s, in Vermont) never has had overdraft protection…if we don’t have the money in our account, it declines our card! Shocking!

  41. Eric says:

    I work for a bank, and overdrafts pay my salary. We usually refund an overdraft fee (up to two or three) if someone has a one time problem and asks, but if it is a constant problem, LEARN HOW TO NOT WRITE CHECKS IF YOU DON’T HAVE MONEY.

    People complain about this all the time, but you can spend the money if you don’t have it. I have access to where people spend their money, and most people that incur large overdraft fees spend most of their money on luxuries. Eat at home, don’t go to the booze store weekly, quit buying new cars every two years, stop going to Starbucks, and get a cheaper cell phone plan. Poof, your overdrafts and money problems are done.

    We have an “overdraft protection” called a cash reserve. That is for oops moments to avoid the fee, but if you opt out, that was your decision. I don’t feel bad for people who overdraft.

    For those of you with problems with holds from your bank, Regulation CC explains when a bank can hold funds. If they deviate from that, contact your local federal reserve district. It is illegal. We only hold about 4 checks per month out of many thousands at my branch.

  42. jgsfcaus says:

    From what I understand, payroll checks are rarely “held” and if so a maximum of three days. If you have it available, sign up for auto-deposit. If you don’t, take a little time and go to the bank upon which the check was drawn and cash the check. The banks HAVE to do this. They will do it for any check drawn upon that bank. Large employers will frequently make their payroll checks payable through a bank in your state. Thus, most of the time, you probably have a local resource at which you can get the check cashed immediately.

    I use electronic money nearly exclusively for anything outside of cash payments. I pretty much always keep a running total in my head of my balance. I never adjust it to the bank website balance, nor the ATM balance, nor what a teller may tell me I have. Simply because I am the only one who knows what’s pending. I also tend to take large amounts out of the ATM and use cash for most everything.

    The only time I’ve gotten caught by an overdraft storm is when I’ve tried to play the system to stretch things out or if I get sloppy. I’ve never had the bank return anything unless not doing so would make my balance negative by more than $200 for more than a day.

    I do think the fees are high, and yes, it hurts when three $10 items cause $90 in fees. But always remember this: checking accounts are what are called demand deposits. The bank treats checks like money which entitles the bearer to the funds on demand, and for which you can write for any denomination on demand. The only way this system can work is that you agree to never write demand instruments for more than you have in your account. Plain and simple.

    I like the advice people have given about the credit cards. If you have a large enough limit, and you are considering making a large purchase using a debit card, use the credit card instead. You can fight a credit card and the credit card company stands behind you. You can almost never fight a debit card purchase to the same results. That goes ditto for buying anything online or hooking automatic payments to plastic. Do it to a credit card, not a debit card.

  43. taka2k7 says:

    I’ve got to concur about USAA being the best bank in the world.

    I was recently overseas and primarily due to my own error, I had 6 overdraft fees. I didn’t have reliable/secure access to the internet, so I hadn’t checked the balance in 2 weeks. If I had, I would have transfered money from another account and avoided half the overdrafts. I explained this to USAA and they waived half the fees.

    Of course it would have been better if I had my credit card as the overdraft protection, in addition to savings account. I’d rather pay cash advance fees than potentially credit rating impacting overdraft fees.

    USAA has waived other fees and matched interest rates for me before. Can’t beat the ATM fee refunds either.

  44. l951b951 says:

    Here’s what irks me about the “cushion” premise. If a bank forces you to sit on $200 to make sure their screwy debiting system doesn’t rape you, they are forcing you to give them an interest free $200 loan.

  45. SaveMeJeebus says:

    @taka2k7: Ditto. I bank with Navy Federal CU as well and get the lower interest rate from them and then have USAA match it in order to keep everything with one company. Non-profit banking is the best.

  46. theunwhiner says:

    People who complain about overdraft fees, need to lean how to balance a check book, or use a credit card to pay for the things they can’t afford. Too often, people convince themselves that their debit card works like their credit card. It doesn’t. It runs on cash. If you have cash, it’s free. When you use the banks cash, you pay the fee. The bank has no way to know how many checks you have written that haven’t cleared. That’s your job. We’re not babysitters.
    Everytime the bank pays an overdrawn check, they are risking that, that customer may never deposit enough funds to cover that check. So Mr. Kiplinger, in your $19 billion in fees, did you subtract out the $ charged off from overdrawn and closed checking accounts that the banks were faced with? I doubt it.

  47. Eric says:

    @THEUNWHINER: It is nice to see someone bring that up. I wrote off losses of about $7000 yesterday from customers that did not pay back their overdrafts.

    A lot of people complain about the fee, but would complain more about the embarrassment of bouncing a check.

  48. lurch65 says:

    No one has mentioned Con. Carolyn Maloney’s (D-NY) H.R. 946, the Consumer Overdraft Protection Fair Practices Act. One provision would require banks, through the merchant, to alert customers when their debit card was overdrawn. Banks have been using advances in electronic banking to their own advantage for some time now. It’s time the consumer was afforded the same privileges. (And it’s not the big charges that sting those of us living check-to-check on debit cards, it’s a series of small charges that show up when deposits are delayed.)

  49. csmith32955 says:

    I don’t use banks anymore, I use a credit union. I use Kennedy Space Center Federal Credit Union and have never had a problem. I always use my debit card for everything and have never had a problem. I carefully manage my account by using a excel spreadsheet and check the online account balance every morning. Transactions rarely take more than 24 hrs to apprear as paid or they have a “pending” transaction section where the item that might take 3-4 days to clear are still showing on my account, but even with the “pending” transaction they still show 2 balances: #1 is what I have showing in my account and #2 is my “available balance” which subtracts out the pending transaction also. So it is vey hard to spend more than what I have. I try and keep a cushion, but, the real secret is to watch your account very closely. It’s so easy and is very irresponsible if you chose not to track how much you spend.
    But I must say one thing about one particular bank, Washington Mutual, my son had an account with them and he is one that didn’t watch his account closely enough and they really ripped him for some serious over-draft charges to the tune of over $280 when they didn’t post transactions for almost 5-6 days and when he checked his balance through a cash teller, it would reflect more money then he actually had available.

  50. haroldwmason says:

    I have a son college who has his own checking account, which is linked to mine so that when he runs low on cash, (which happens more frequently than I’d like :-), I can transfer money electronically from my home or work computer and avoid overdraft fees…

    Citizens Bank has started something new lately in how they process overdraft fees (to their advantage of course :-)

    In the past, if there was a balance (for example) of $100.00 in his account and he spent $101.00 on books, as long I moved money to his account *before* the transaction was posted to his account and the money paid to the merchant, we could avoid any overdraft fees. Kind of like in the old days of writing a check. If you write a check on a Monday for $15.00 and you only have a balance of $10.00 in your account, so long as you deposit at least five or more dollars in your account *before* the check is deposited by the recipient of the check, then you could avoid any embarrassment and fees.

    It should work the same way with debit card transactions – (over draft fees should *not* be charged unless and until, the bank goes to pay the merchant from your account and finds that you don’t have enough of a balance to cover the transaction) – however – recently, Citizens has started charging overdraft fees *before* the merchant is paid – in essence, they are charging you a fee for not having enough money in your account – even though the money is technically still *in* your account as the merchant has not yet been paid!

    I’ve heard that the way banks make money these days is primarily on fees – that’s fine, you have to make money somehow or else why be in business… I’ve heard of banks doing things like processing transactions in order from largest to smallest as a means of increasing the number and frequency of overdraft fees *and* I can understand that banks should charge fees when people are spending money that they don’t have – However, It seems to me that fees should not be charged *until* the transaction in question is “posted” against your account – thus – taking the money out to pay the merchant. Otherwise, the only one who wins is the bank – as they now have charged an overdraft fee (which you now owe the bank), and they have not paid the merchant yet so technicall they still have your money in their bank, the merchant sold a product or service but have not been paid by the bank yet, and they had to pay a transaction processing fee to the card proces sing services that handle the debit/credit card transactions…

    This is not right!

    The bank branch manager has been nice enough to refund some of the over draft fees and admitted that they recently changed how they process overdraft fees and was confused as to how it works and why we were being charged fees for certain transactions when in fact they hadn’t even been paid yet!!!

    Citizens Bank is *not* a small neighborhood bank – they are part of a much bigger bank, Royal Bank of Scotland.. imagine how much money they are making skimming people’s accounts (around the world) with overdraft fees on transactions they haven’t even paid out yet!

    Some may say it sounds like small change… think again…

  51. bccrn says:

    I’m curious…did those of you who are condescendingly quoting the obvious, “Just watch what you spend and don’t overdraw your account” actually read the headline in this article: “Banks earned $19 Billion from Overdraft Fees This Year?” Folks, that’s not MILLIONS….it’s BILLIONS….19 of them. THAT IS LUDICROUS!

    I think we all can agree that nobody likes to pay overdraft charges. But having to pay them is not the issue; the issue is that the amount the banks are charging customers for overdrawing their accounts is OBSCENE! Nobody (bank manager, bank employee, etc.) will ever convince me that it costs over $30.00 to resubmit a transaction for payment. That is absurd. We all know these fees are designed to be punitive.

    For the bank employee who stated that overdraft fees pay his/her salary….is that right? Pleeeeaaassseee….it doesn’t take $19 billion to pay the salaries of bank employees. But, I would like to know the annual salaries of the CEO’s of the major banking institutions. You think we could get them to publish that information? Probably not.

    I think it’s time we brought information like this to the attention of our senators and congressmen. This is crazy, and it needs to stop. I do not have a problem with any business making a profit; No profit = No business. But to make this kind of profit off of the backs of hardworking American citizens is ridiculous. With the high cost of living these days, this kind of institutional gouging is simply shameful.

  52. dlk1973 says:

    I have been banking with BOA for over 7 years….and rarely have any issues. I also keep VERY accurate records of what I spend using excel. However on the odd occasion that i happen to miss something (my wife buys something and forgets to tell me about it) then i am punished to a ridiculous degree! For example this week was rather tight. I had everything down to the penny with very little left in my account. just so happens that a gas charge of $53.01 that my wife made several days ago did NOT show up online until yesterday. I had no record of it and it overdrew my account by -$2.04. Then other transactions that I HAD record of decided to go through at the same time. End result…..being -$2.04 on my account cost me well over $150 in overdraft fees! Tiny mistake…..HUGE penalty. Had this $53.01 DEBIT CHARGE gone through when it was made….i would have seen it and could have transfered money in order to avoid going over…..Thanks BOA and you’re welcome!

  53. xd0llsteak says:

    It’s such a shame that banks have been able to get away with ruining people’s finances through policies like overdraft charges. Hopefully with all of this recent economic reform, consumers will be spared from such horrific practices.

    Sadly, many Americans saddled with pre-reform overdraft fees still find themselves deeply in debt. Companies like DebtGuru are thankfully there to help. By working with individuals and banks to lower pre-reform overdraft payments, they have already allowed many Americans to get back on their feet. You should really check them out!