5 Tricks Banks Use To Charge Consumers More Overdraft Fees
Wednesday, July 08, 2009
I've Been Mugged warned its readers in February about higher credit card interest rates and lower card limits by banks which followed during March and in April. Unfortunately, banks haven't given up. They still seek ways to increase their revenues, which means new and higher fees for you.
WalletPop has a good list of five tricks banks use to charge you overdraft fees more often and with greater amounts. Follow their advice and you can avoid these tricks. One trick banks use is "Reordered Transactions:"
"Just because you bought a smoothie in the morning with your debit card and paid your rent in the afternoon doesn't mean that's the order in which your transactions will be cleared. Banks often change the order in which debit transactions clear – and tend to clear debits before clearing any deposits made – from highest to lowest amounts. By doing so, the customer's account is depleted more quickly and they'll incur more overdraft fees..."
Part of the problem is that banks don't disclose the order that they process transactions. Another trick to watch out for is "High Daily Maximums:"
"With many banks, there's no limit to the number of overdraft fee-triggering transactions you can charge. Bank of America, HSBC, Chase and Wells Fargo have no limit per day, while Citibank permits four (for a total of $136). Some banks use a tiered overdraft system that increases charges for subsequent overdrafts. Chase charges $25 for the first offense and $32 to $35 apiece for subsequent charges. At PNC Bank, the first three offenses cost $31 a pop, the fourth through sixth each cost $34 and seven times or more costs $36."
Experts advise that you keep at least a $100 minimum in your checking account to avoid overdraft fees. Experts advise consumers to ask your bank to set the debit overdraw amount on your account to zero, so it will reject transactions instead of incurring overdraft fees
Another trick is "Holding Deposits For Clearance:"
"Take a close look at your bank account. Just because it shows that your paycheck was deposited doesn't mean you have complete access to those funds. When paychecks are deposited, the bank can take two to five days to clear them..."
What consumers can do: contact your elected officials and demand legislation to protect consumers:
"... the Consumer Overdraft Protection Fair Practices Act, legislation that aims to prohibit overdraft fees unless the consumer opts for "courtesy" overdrafts. Even if a consumer opts for overdraft protection, they must receive a warning of an impending fee before they finalize a purchase that may trigger the overdraft fee."
I strongly encourage you to read the detailed WalletPop article.
This is sad that the federal government continue to let anyone, let alone this veteran who proudly served, to be so maliciously treated. The mthods in which they llist are debits from the account highest to lowest vs the federally mandated chronological order is WAY PAST A JOKE AT THIS POINT. It serves only one function, which proves its malicous intent by the bank owners, to MAXIMIZE fees that they asses; even though I did not actually spend my money so irresponsibly. President Obama needs to take a SERIOUS look here as it is killing the financial stability of those that fought fopr our freedoms and outright RAPING those that continue to live in and pay taxes in this great country. I hear that it is not just us though. The worst part is we can only talk to fullfilment center operators who can only charge us for calling in to begin with...PAST A JOKE!!!
Posted by: Jayson M. | Saturday, November 28, 2009 at 12:25 PM