More on how banks maximize your overdraft charges
Wesabe user ‘haberschmidt’ just posted a fantastic piece in the Wesabe Groups section, under the Smart Banking discussion about overdraft fee policies at the top U.S. banks. In the post, haberschmidt details how many different ways Wachovia has found to charge overdraft fees:
As the net effect, there should have been zero fees for overdrafts, but Wachovia ratcheted it up to 7 overdrafts for $245 in fees. I am absolutely appalled, and it has nothing to do with indignation over payment, since I ended up resolving the overdraft protection issue at the branch level and getting the fees removed. […]
Although the branch corrected the overdraft protection issue and reversed the fees, I am closing my accounts. I believe strongly in voting with my dollars and I don’t want to belong to a bank that takes advantage of its customers in this way. It strikes me as a predatory practice, and the kind of thing of which Congress should be aware when it reviews regulation on the credit card companies and other financial industry practices.
The entire post is well worth reading, since it applies to at least nine of the top ten banks in the U.S., and many others besides.
When we first launched Wesabe last November, we were not surprised to see that our #1 top merchant at that point was Amazon, and #2 was Netflix. That matched well with the stereotype of “early adopters.” What was surprising, though, was the merchant #20 was Overdraft Fee. If you think overdraft fees just hit people who are “bad with money,” they don’t — they hit a huge percentage of the population, and as Wesabe has grown, we’ve seen that more and more. Currently, our users have been charged roughly $200,000.00 in overdraft charges in just the past few months — an average of one overdraft charge for each and every person tracking their money on Wesabe. That’s a huge amount of money for consumers to lose, when it could instead be going to pay their bills or improve their lives. We’re out to help our members reduce that number to $0.
The good news is, we also see that almost 70 of those overdrafts, amounting to about $5,000.00 in fees, have been refunded by the banks — including, it sounds like, haberschmidt’s $245.00, and $216.00 in overdraft fees Washington Mutual tried to charge me a few months ago. That’s a good start, but we can get that down a lot from where it is now. In the past three months, I’ve spent a grand total of $1.50 on bank fees — down from $1,425.00 in the year I started working on Wesabe. (And I’m really mad about that $1.50!)
Whenever you see a fee on your bank account, ask the bank to refund it, and if they don’t, start looking for a bank that won’t charge you that fee. And check out haberschmidt’s post — it’s great for every consumer to read.
April 30th, 2007 at 5:41 pm
Outstanding work!
April 30th, 2007 at 5:57 pm
Dugg here: http://digg.com/business_finance/Wesabe_community_is_fighting_abusive_bank_fees_2
May 13th, 2007 at 5:35 pm
Pleae, please help us. If you think the overdraft charges are outrageous. Check this out. Wachovia has taken over 3,000.00 from our PERSONAL CHECKING ACCOUNT for our mortgage payment when it is late. This policy that is not disclosed, which even the bank employees are not aware of, call “off-set rights.” The last draft from our account left us with an overdraft which the charged us 105.00. This is so incredible. We were in the process of refinancing so that we could get the payment down. Please help us. This policy is not disclosed. I want this blog out as it will buy us some time until we can get a lawyer. Thanks.
May 14th, 2007 at 5:06 pm
Whatever you do, don’t switch to Washington Mutual. I had an HSBC account for a while and they let me link my HSBC credit card to it to cover overdrafts, now I have Bank of America (I moved to Ga. and had WaMu at first) which Bank of America seems pretty cool and has overdraft protection.
Just, whatever you do, don’t become a WaMu customer.
May 16th, 2007 at 6:30 am
I can’t recommend USAA (www.usaa.com) highly enough. If you qualify, don’t walk, *RUN* to their website or call their 800 number and join up. I have moved *all* of my finances over to them from BofA after having been “Boffed” by them one too many times.
My checking account is linked (fee-free) to my savings for overdraft.
I have automated transfers to pay my free, rewards-earning credit card each month. I pay my bills from their website (fee-free), and they re-imburse me for ATM charges incurred by using non-USAA ATMs (of which there are 0 in my area). I can deposit checks through the mail (free postage!) or, get this, I can SCAN the check on my PC scanner and UPLOAD the image to their site in order to deposit checks!
I have my auto and homeowner’s insurance with them, and my investing is with them. I even use their financial planning service.
I DO NOT however, work for them, or have anything to gain from them in any way. I am simply a *VERY* satisfied customer of theirs. They recently were named the #1 company in the US for customer support. And let me tell you, they’ve earned that ranking, and continue to do so each and every day!
Please, do youselves a favor, if you qualify, at least check them out.
I haven’t paid overdraft fees in 2 or 3 years since moving my banking away from BofA. Not one! It is actually a *pleasure* to call them and deal with their customer service people.
May 16th, 2007 at 6:31 am
About BofA’s overdraft protection: They charge at least $10 every time it kicks in. This can add up really quickly, so buyer beware.
May 16th, 2007 at 10:05 am
I agree with fred on USAA. I use them for almost everything and recommend them highly.
May 24th, 2007 at 3:29 am
About 6mos ago, I recieved my paycheck on a Fri. and was set to deposit in my account at Wells Fargo the next day (my direct deposit hadn’t initiated yet). I got a call late Fri. night that my sister had a medical emergency and was in the hospital. I forgot about the check and used my ATM for the next 2 wks. (I only use the debit card so I can track spending). On the next payday I went to deposit my check and the teller advised me i had $1100.00 in overdraft fees. They refused to waive any fees and one teller even laughed about the situation while I was speaking with the manager. I’ve called and spoke with call center supervisors, but their story is the same. They have the nerve to call the clearing of a $2 debit and charging $30 for the overdraft a “courtesy”. When I asked the branch manager if I had the option of determining if I want this “courtesy”, they said no. When I asked if I had the option of setting a pre-determined debit amount that I would allow, they said no. It doesn’t seem right that a bank/company can charge for services that weren’t requested. Wells Fargo said they cleared the charges through my account, even though it didn’t have the funds, because the Visa logo on my debit card is some sort of guarantee to vendors. The California Attorney General said they wouldn’t get involved in this matter and I’m researching any other options for recourse I may have missed. Thanks for the opportunity to discuss my situation here and I look forward to any suggestions…
June 10th, 2007 at 11:47 pm
Hate Altier Credit Union over the last 1 year they charged me over $6000 in overdraft fee. I thought that my Money Maker account was for overdraft it’s a savings account. Reported company to Better Business Bureau for starters. Next I probably will get a lawyer involved. These companies are out of hand. Good luck to you Joe. That is alot of overdraft fee. See if the company is with the Better Business Bureau start there and see what a lawyer. Might charge you. Even if you get half the money back put the bank through hell. That’s what I’m gonna do.
June 13th, 2007 at 8:22 am
WACHOVIA - THE OTHER WHITE ANTICHRIST
I JUST HAD A SIMILAR SITUATION WITH WACHOVIA - I JUST CAME ACROSS AL THIS BUT MY FEES WERE OVER $500 - YES, $500 - AS THEY FORGOT TO CREDIT MY PAYCHECKS INTO MY ACCOUNT FOR TWO DAYS - THEY ARE DRAWN ON WACHOVIA CHECKS, SO THEY ALWAYS ALWAYS GO IN, AS CASH, SAME DAY. LONG STORY VERY SHORT, WACHOVIA ENDED UP ADMITTING THAT THIS WAS TOTALLY THIER MISTAKE - PROMISED TO PAY ME FOR A RENT CHECK THAT HAD BOUNCED, PUT IT ALL ON WACHOVIA LETTER HEAD AND THEN, HAD ME COME INTO THE BANK ONLY TO RENIG ON THE OFFER OF COVERING MY RENT AND PROCEEDING TO TELL ME THAT THEY WERE ONLY GOING TO COVER $35 IN FEES. NEEDLESS TO SAY, I FLIPPED OUT.
THE VERY NEXT DAY - AFTER MUCH BACK AND FORTH, THEY AGREED TO COVER ONLY 1/4 OF THE FEES AND THEY SUBSEQUENTLY SHUT DOWN MY ACCOUNT. TRY GEETING ANOTHER BANK ACCOUNT AFTER ALL THAT - NOT SO EASY.
June 21st, 2007 at 9:23 am
TCF Bank in the midwest is quite similar…I’m currently trying to fight $250 in fees they’ve charged me. I do not suggest becoming a TCF customer to anyone who doesn’t like being raped.
August 31st, 2007 at 8:21 pm
You are right TCF will get you, and get you good!!!! They have gotten about 300.00 dollars of overdraft fees out of me. Then I call them today and the stuff posted on the 29th finally shows posted and the deposit I did yesterday (cash) shows today and the deposit today would cover all transactions. However as they put it they go from highest to lowest on deductions then they put in the deposits. I did everything like I am supposed to and counted on them doing the transactions in order of dates they are done. But NO they dont do that. why is yesterdays depost not posted till today? Why go from highest deduction to lowest and then do all the deposits last? I am looking for a new back!!!!! I have been with them for four years and they just now started doing this to me in the last four months.
November 1st, 2007 at 4:33 pm
Recently I was hit with several overdraft fees, and they were imposed in a most unethical way. And this was not the first time! As I sat fuming over the money that I felt had been robbed from me I realized, I had enough bank fee stories of my own to start a blog website! So I did! Please visit www.FightUnethicalBankFees.com and tell me your story! Ultimately I would like to create enough feedback to get the attention of the banking industry. The website is designed to focus on the huge problem of banks that charge fees in an unethical or deceitful manner. I hope that you will visit and help support this fight!
November 3rd, 2007 at 6:45 pm
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January 18th, 2008 at 8:47 am
I have in the past worked for a bank. I won’t say which one but its a horrifying system of corruption. Almost all banks do two things to maximize charges.
Holds: When you swipe your debit card the money instantly goes on hold. This money leaves your available money and is out of your account for 24 to 48 business hours depending on your bank. The money is not actually paid out to the merchant but just held where you can’t spend it until the merchant collects it. In this time frame typically the merchant collects the funds and everything is fine. However, some merchants are horrible at collecting in a timely manner so the money goes back into your account after the 24 hours and you seem to have more money than you actually do. You spend money based on your available balance and then that merchant collects, ooops! Overdrafts!
No bank I have ever seen will show you when a hold appears or falls off your account so you can take into account for the merchants that do not collect in the first 2 days. The merchant in most states has up to 60 days to collect.
Also, here is a fun fact. If you go to a hotel they place a LARGE sum of money on hold, as do travel agencies, auto-rental agencies and airlines that stays on hold till you actually finish business with them then the vastly overestimated hold is released and the actual amount spent at these companies appears in its place. However if you do not know about the extra hundreds of dollars on hold in your account any other transaction that goes through will create overdraft fees. The massive amounts of money held for hotels and travel agencies are “Unavailable” so the trip to McDonald’s you make on vacation costs you an extra 35$ in overdraft fees.
Posting Largest to smallest items:
Most banks will wait until the end of the business day putting every charge on hold and collecting all the checks then post the largest items to your account first so that the maximum funds can be removed then once the large sums are gone the smaller ones create more overdraft fees where as if they posted smallest to largest they might get 1 overdraft fee a day they can get 6 by posting largest to smallest.
FYI: Most banks had a limit to the number of times you can overdraw your account in one day, usually around 250-300$ worth for individual accounts. As of this year most banks are removing that limit. I recommend anyone having recurring overdraft issues call their bank and ask them how much they can be charged in one days fees and then ask them about overdraft protection. Trust me, its better you have it. Its still the bank charging you fees for something that costs them nothing, but its better than the financial rape they perform on a daily basis to people who don’t have it.