Consumerist On Marketplace: Bank Gives You 24 Hours To Fix Overdrafts

I was on Marketplace on public radio this morning, chiming in about Huntington Bank’s new 24-hour grace period they’re giving customers who overdraft. If you deposit the funds you’re lacking within a day, no fee, but if you don’t, you’ll get a $23 charge. This program is automatic, you don’t need to be enrolled in overdraft protection. Sounds nice and innovative, but I’d rather the bank deny the charge and get no fee instead. Here’s the audio:

Bank's 24-hour overdraft grace period [Marketplace]

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  1. ToKeN2k6 says:

    Wait a second, I would be all about using something exactly like this! I have overdraft already, but usually when I go under, it is within 24 hours of getting paid (paycheck every Friday, just when my accounts gets around $2) I think its perfectly reasonable if you don’t have overdraft and are given the 24 hour grace period, you should either make it or get hit with the fee. Then, get overdraft!

    • MamaBug says:

      we are in the exact same way. we meticulously keep track down to the penny, because come Thursday at midnight, the paycheck is in – when we have $0.27 left (true story one week). We used to russian roulette it and try to beat the bank, and it would only work every so often. we’ve opted out of overdraft (not opted in?), but this thing would rule.

  2. Rectilinear Propagation says:

    This program is automatic, you don’t need to be enrolled in overdraft protection.

    Can someone who can hear the audio explain this? How can you not need overdraft protection if they’re going to be charging you an overdraft fee?

    • apple420 says:

      I can’t listen to the audio now either, but I can make a guess. The overdraft protection laws don’t cover all types of transactions, only debit card purchases. If the transaction was the type that would still be allowed to overdraft under the new law, then this policy would take effect.

  3. Tim says:

    Do they allow you to completely opt out of both overdraft protection and this grace period thingee, and just let the transaction be declined?

  4. spmahn says:

    By law now they have to let you opt out of overdraft charges if you don’t want to pay a fee.

    • SerenityDan says:

      no, by law you have to opt IN to something like this. Something like this is exactly the thing the new law was made to stop.

    • Kevin411 says:

      For Debit Card purchases/advances this is true, but not for checks and certain other transactions. I hope Ben will clarify, but was the bank automatically opting people in to the 24-hour overdraft plan for debit transactions, or does this apply just to checks. If the former, how is is not in violation of the new law?

      • spmahn says:

        That is true, Checks and ACH Withdrawls are not covered by the new law, only debit card transactions. Regardless, from the way this article is written it definitely sounds like this is a clear violation of that law.

  5. grapedog says:

    This isn’t a half bad option, as long as they make it so you can opt out if you wanted to as well.

  6. framitz says:

    This sounds illegal based on my very limited knowledge. The 24 hour grace period is nice, but the charge not so much.

    I think this would require an ‘opt in’ from the customer to be OK.

  7. framitz says:

    This sounds illegal based on my very limited knowledge. The 24 hour grace period is nice, but the charge not so much.

    I think this would require an ‘opt in’ from the customer to be OK.

  8. ahleeeshah says:

    Man, everyone here hates on BoA, but before they changed their overdraft rules to fit the new rules, I used to have a few days to bring my account balance up. I would get a text telling me I had gone over, and what day I had to have my deposit in.

    • apple420 says:

      Did they really used to do that? I seem to recall reading all sorts of crazy things BOA did to cause an overdraft, never that there was a grace period. I have no personal experience with Bank of America.

      • ahleeeshah says:

        Yes, really. Up until whenever the law changed to make you have to opt in to overdraft protection, I had a few days to make my account balance positive before the charges would go through. I might still have my old phone (changed this month) with the texts I got if you need proof, but they did it.

    • tbax929 says:

      You are correct. I remember B of A doing that for me a couple of times back when I was with them. I assumed they did it because I also had a savings account so, which is where most of my money was kept. I’d get that notice and go online and transfer some money into my checking account. But maybe they did it for everyone.

      • ahleeeshah says:

        I have a savings account, but there’s hardly ever any money in it, so if it had anything to do with that, it wouldn’t apply to me.

    • FerretGirl says:

      Me too. I overdrafted recently when I forgot to deposit a check and I was totally bummed, thinking I’d have an account full of fees but I didn’t! 24 hr grace period FTW!

  9. AnonymousCoward says:

    I think everyone is assuming that the overdraft law has a bigger effect than it actually does. The overdraft opt-in law affects ATM and debit card transactions, but not paper checks or automatic bill pay. If I’m using my debit card, then yes, I want the bank to follow the law, and just deny the transaction. But if I’m using automatic bill pay, then this is actually pretty cool.

  10. keepntabs says:

    This “grace period” offering is only for customer’s who signed up for bank emails and text alerts. Right now only 5% of their customers have this service.

    I have a Chase account, that I originally opened with WAMU in 1998, and signed up for text alerts a few years ago. Last week my husband had an automatic bill payment come through, but didn’t verify that there was enough money in the checking account. I received two text alerts, one that stated my balance was below a set amount, and another one that stated I was overdrawn. I immediately went online (a day after the site was finally back up), and transferred money from my savings account into my checking account. We were not charged an overdraft fee. This is Chase’s policy, because they post deposits before withdrawals are debited from accounts at the end of the business day; text alerts is not a requirement.

  11. nucwin83 says:

    Overdraft on checks or billpay: OK. Debit card purchases: No.

  12. MattDeZ says:

    I worked as a teller at a regional back in north-west Connecticut one summer during college. Every day we had to come to work an hour before the bank opened, we got 30 minutes to set up our window, then we had 30 minuted to call customers that had over drafted their account the night before. They were told they had until 2:00PM that day to deposit sufficient funds or they would be charged an overdraft fee.

    Why can’t all banks have a grace period like this?

  13. JohnDeere says:

    bank of america gives you 5 business days to catch up if your total overdrafts dont go over $10.

  14. Sparty999 says:

    I WOULD LOVE THIS!!!!!! because of having a joint checking account with my wife… on occasion this happens, and something like this would save me at least a couple hundred bucks a year!!

  15. JeremieNX says:

    This is nothing new. Most banks have a posting policy that places deposits first, and then debits from large to small. So if you overdraw at 9am and then deposit at 2pm, you are still fine.

    • keepntabs says:

      It’s a good thing you said “most” banks, but it was the way that Wells Fargo posted deposits and withdrawals/checks that got them into trouble. WF’s policy was to post ATM withdrawals first, then deposits, and finally checks written against the account the largest first. This allowed for more opportunities for overdrafts. Not every bank does it this way, and not every bank offers a grace period for overdrafts; even if a deposit is made before the EOD business as the overdraft.

  16. ekincam says:

    My bank usually just takes any overdraft out of my savings account automatically and I cannot recall being assessed a fine as a result. I don’t remember signing up for overdraft protection either.

  17. ElizabethD says:

    I heard you while I was driving to work and I was all like “Woooo-woo, it’s Ben”

  18. human_shield says:

    Wells Fargo has always done something like this. If you transfer funds before the “Pending” transaction causing the overdraft clears, the overdraft charges also disappear. It takes a day to come out of Pending.

  19. Tonguetied says:

    If you overdraw and the bank denies a charge due to insufficient fund then stores typically charge at LEAST $25 in fees if not more when you go back to them to make it right. I’m at work so I can’t listen to the audio right now but I just don’t see how Huntington Bank’s policies are not a good deal…