I'm SO glad I got my account way back in high school. $500 overdraft protection "loan" that is basically a line of credit. I overdraft, the bank automatically pulls out what they need to cover the OD. They charge something around 11% interest on it so when I pay it off, usually within a few days depending on payday, it only costs me less than a dollar.

So they're charging the fee and then making their customers ask for it back? Seems silly.

I have a similar service (that is free, go credit unions) and honestly, I'm not sure how much I'd pay for it, but IMO it is worth paying for.

Someone wsa saying though that there is some transfer law that might be violated by such a process...

Not surprised. My bank has overdraft protection linked to a savings, so if I overdraft it costs me $10 as opposed to $35. There's no charge to have this setup, but obviously some greedy...um, I mean clever banker figured out they could charge annual for it as a service to recoup some loss revenue.

@coren: There are limits on how many electronic transactions can occur between bank accounts. (I think 6 a month or something like that). I have gotten notices in the mail a few times indicating that I have reached this limit back when I would get several checks a month as a freelancer, and deposite them to my checking and then transfer a portion of each into my savings.

@xtc46 - thinksmarter on twitter: I think that somehow they're getting around that by classifying them all as one account maybe...but yeah that's what I was thinking of (I've gone over that pretty much every month since I've had my card but a couple)

I have the same thing as henrygates does. If I overdraft, it pulls whatever the amount is from my savings account and puts it into my checking to cover the cost, and then charges a $10 fee.

The nice thing is that it's only up to $10 per day, so if I accidentally buy a bunch of little items (which I haven't done, thankfully) after I'm overdrafted, the $10 gets paid just once and the rest keeps coming from my savings.

Although, lately I haven't had anything in my savings, so I just called the bank and told them to decline the card if I can't afford it. Haven't had to use that either (I'm kind of anal about keeping track of my finances) but nice to know that I won't get stuck with fees.

Citizens is a pretty good bank, in general. We've been using it for our personal & business accounts since 2002, and they haven't pulled any sneaky crap like that on us.

I have a Citizens checking and savings account, and they sent the letter about this back in July. When we signed up 2 years ago, they told us we could link our checking account to our savings account or an overdraft line of credit. I figured I'd go for the line of credit since if my checking account got hacked, I didn't want my savings to get drained as well.

Last year, they started charging a $60 annual fee to have the overdraft line of credit. This year, they're saying not only is it a $60 annual fee, they're going to charge $5 per occurrence (even though it's going to a line of credit). So, it's cheaper than $30 or $40 if you do it all the time, but a perfect waste for someone like me who actually balances his books :P

If you're not in the program, you just pay the $40 each time (or whatever it is now).

It used to be a good program that gradually got sucky.

The interest on a savings account is so small it's not worth collecting. One overdraft fee will wipe out a year's worth of interest on your savings account. That's why I only have one account (checking) with my bank and all of my money goes in it. Thus no need for transfers, overdraft "protection" extortion or any other raquet the bank can dream up.

The only time this isn't the best way is if you reach the FDIC insurance limit on the account, but at that point you probably don't care about fees anymore.

@Rylar: Having a sepearate savings has many advantages to just having a checking.

For isntance, I keep a savings where most of my money goes, I only put enough into my checking to cover my expenses, the rest stays in savings. In the event my atm card gets stolen, the most im out is what was in my checking (including when they freeze the acocunt becasue of fraud reports).

I also have a savings for actually saving, so I set the money aside and only touch it when absolutely needed. Out of sight, out of mind and all that jazz.

I moved to Boston recently and looked between Citizens and BofA (coming from California, I already had BofA, but needed new Mass. accounts). I thought Citizens would be nice, as a smaller, semi-more-local bank.

First, I noticed there are many more BofA ATMs around Boston than Citizens (but Citizens is easily the second-biggest).

Finally, I inquired about linking my savings to checking for overdraft, as I've always done with BofA. Not only did Citizens tell me they'd charge for each transfer, like every other bank, but they also mentioned the annual fee. Just to link the accounts! Obviously, I went with BofA. Apparently Citizens doesn't feel the need to compete.

Citizens Bank has the same logo as Royal Bank of Scotland. Hmm.

@MsAnthropy: Duh. OK, Google is my friend and all that. Citizens Bank is Royal Bank of Scotland, and has been for 21 years...

This "paying for the privilege of having your own bloody money transferred between your own bloody accounts with the same bloody bank" crap would NEVER fly in Scotland, I'm telling yer!

@henrygates:

I do hate the way I'm continually posting about how blah, blah, In the UK they do it like THIS, blah, blah (as if anyone cares), but I'm stunned at how the banks manage to spin things so that they're doing you some generous service by "only" charging you (say) $10 for an automatic electronic transfer between your accounts should one account overdraw. I thought the UK banking system was shitty, but people would never put up with that. Any decent bank offering decent checking accounts will grant a set overdraft limit as standard on the account, and if you should chance to use that overdraft at any point, all you will pay is interest, calculated daily, on the amount you happened to overdraw by. So while you wouldn't want to treat the overdraft as real money, obviously, if you happen to dip into the negative for a day or two, it's really no big deal. I have an agreed overdraft limit on the checking account I still have in the UK, and the interest rate they charge for using it is much the same as you'd pay on a credit card. Of course, if you exceed your overdraft limit, or go over the agreed limit by so much as a penny, you'll be hit with all sorts of charges, followed by charges for writing you a letter to tell you about the charges. But for making use of the overdraft facility that's supposedly a benefit offered with your account... not so much.

To me, at least, it's just outrageous that the bank can offer this wonderful "service" where they will actually charge you money, PER USE, to transfer money from your own savings account, and expect you to think that this is a wonderful feature of your account. People are too used to being walked all over by the big banks, IMHO.

Citizens has ALWAYS charged for overdraft protection. $25/year. They recently upped the rate and sent notifications THREE MONTHS AGO to all customers (separate than your statement) they were doing this with instructions on how to opt-out and close your line.

@MsAnthropy: Yeah, was going to say. It came handy on a trip to London a few years ago. ATM fees were waived if I used RBS ATMs. :)

@tereckkincaid: What kind of account do you have? They were charging me $25/year until the letter in July, when I decided it was no longer worth it since I haven't had an overdraft in 5 years, or even been close, and closed it as per included directions. I have a green checking (the free if you direct deposit account)

@xtc46 - thinksmarter on twitter: I believe you are referring to Regulation D. The limit is indeed 6 per month.

@Rylar: Actually, Citizens has a pretty good program that gives me $1 - 3 in interest each month. Each time I use my debit card for a purchase instead of a check or I use online billpay, they give me $.10. It's not pure interest in percentage but on a free checking account, it's pretty damn good. They call it Green$ense, but it's pretty new and only been around about 8 months.

On my personal checking I average $1.45/mo and for our joint checking (which we pay our bills out of), I average $3.37/mo

@djshack: My husband uses BoA and they have their own issues and problems. If they work better for you, great. The main reason I'm with Citizens over the local credit union is actually the banking hours. There's a Citizen in nearly EVERY Stop & Shop in the area and they're open until 7 pm Monday - Saturday and until 3 pm on Sunday. Very, very convenient. I generally hit up the ATM on my weekly grocery trip for deposits. There are TWO Citizens ATMs in the small town of Winthrop. I never lack finding one.

Schwab wins again. There are no fees associated with overdraft credit line except for the interest that accrues. And every atm is 'mine'.

Why would there be a fee at all? What does it take, like a few lines of code to link an account? Banks are ridiculous with their damn fees. I pay a $5.95 a month fee to have my checking account *allow* ms money to download updates. Now, keep in mind, I paid for MS Money, and keep in mind I have free checking and can download ms files seperately to my desktop all I want, but when I link the account and download files from MS Money, it incurs a $5.95 per month recurring fee.

I would just download the files and updated money manually, but it doesn't seem to work right...some transactions won't show.

@chiieddy: Last July we moved everything to a local credit union because of this BULL CRAP with Citizens. (We originally joined Charter One bank and Citizens bought them out.)

We wanted to link our savings and checking together, and they said even using our OWN money to cover any potential overdrafts, they were still going to charge a $25 "transfer" fee for EACH occurence! Although I was fairly certain an overdraft wouldn't happen, I felt violated that they could pretty much take my money for the hell of it.

I hated their website design as well. SCREW YOU, CITIZENS... I LOVE MY CREDIT UNION.

@chiieddy:

I've got the same; I'm i PA. The first year we did it, it was totally free. Then came $60, now $60 + 5. And yes, we're opting out.

@Saboth: Profit! The same reason cell companies charge $0.20/message since the actual cost is too low to measure. Charges & fees are all about profit. They have zero relation to cost. Some more examples are: Sirius/XM royalty fee (profit), Telco "regulatory fees" (profit), cable/satellite downgrade fee (profit), ETF (profit), over daft fee (profit), foreign ATM fee (profit), statement fee (profit), convenience fees (profit), will call fee (profit), late fee (profit), over the limit fee (profit), in-activity fee (profit), return check fee (profit), check-in baggage fee (profit). These all have 2 things in common: the cost is too low to measure for the provider and they are all there because they make profit for the company.

@tbax929 is back from the beach: This is common for many areas of business, in fact I'd guess it's standard practice for banking?