More on how banks maximize your overdraft charges

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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.

21 Responses to “More on how banks maximize your overdraft charges”

  1. Jesse Robbins Says:

    Outstanding work!

  2. Jesse Robbins Says:

    Dugg here: http://digg.com/business_finance/Wesabe_community_is_fighting_abusive_bank_fees_2

  3. Linda Marion Says:

    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.

  4. QuickRob Says:

    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.

  5. fred Says:

    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.

  6. Jenny Says:

    About BofA’s overdraft protection: They charge at least $10 every time it kicks in. This can add up really quickly, so buyer beware.

  7. Marc Hedlund Says:

    I agree with fred on USAA. I use them for almost everything and recommend them highly.

  8. joe Says:

    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…

  9. Joe G Says:

    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.

  10. ANDREA Says:

    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.

  11. Eve Says:

    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.

  12. Char Says:

    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.

  13. Kathy Says:

    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 http://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!

  14. Woes with Wachovia « conservative geek Says:

    […] http://blog.wesabe.com/2007/04/27/more-on-how-banks-maximize-your-overdraft-charges/ […]

  15. AnswerMan Says:

    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.

  16. Mike Petrus Says:

    First I would like to say, I appreciate your courage in standing up to the big banks. I am a oilfield firefighter and I depend on online banking to pay bills and balance my accounts. My work takes me to all parts of the world and it allows some organization to my account or so I thought. I opened up a Wachovia account last year, set up overdraft protection from money market account to protect checking. In June I opened up another checking account for bill pay so I would not lose sight of my spending. When I arrived at the bank there was a new bank manager and after several attempts at working the computer and re issuing a new debit card, I left the bank thinking all was in order. A few days later I went online and found that I had 2 extra accounts and when I tried to use my bank card it was rejected, I called him and asked for a explanation, he said it was a error and that it was fixed. I tried to use the card again and it worked. I left for Russia and was there for 46 days, while there I went online and saw all my bills were returned with NSF and had been charged 1045.00 NSF I just about hard a stroke. When I returned to Houston I called the bank and was told that I had wrote bills on the wrong account. I asked him about my over-draft protection and I was told that my money market account was canceled due to to many withdraws on MMA and that money was moved to free checking account where there was no protection. I went from no NSF the whole time I did business there to 1400.00 in fees and all I did was opened up a account. I was HOT enough to weld and have just got my blood pressure down long enough to write this. There was enough money to cover all my bills 3 times over. My question is there anything that can be done. He stated that a letter was sent to my address (not Russia) about the MMA being closed and that was all they needed to close the MMA and move funds to a unprotected account. I am from small town and never have had anything like this happen to me. I am hoping you can point me in the right direction to resolve this issue. Is there legal boundaries crossed here? I know if I would attempt something like this I would be arrested on site. Has the banking system joined forces with the credit cards companies and think there above the law? thing have changed alot in my 52 years. I understand now why my grandfather a hard working farmer buried all his cash in a jar in the back yard. I am in process of moving to another bank, If you come up with a legal way to drag them through the mud, please advise me. I had it with the big bullys always picking on the small guy

    M Petrus

  17. JcT Says:

    First of all i want to say my condolences to everyone going through this ridiculous issue. I myself am suffering from this weekly shafting of bank fees. I apologize for the wall of text but i feel i must finally vent my frustration. I am 24 years old and i have been struggling to stay on the positive side of my accounts for about 2 months now. I am a member of Bank of America or as i like to call it Crap of America, or Skank of America. My story is as follows:

    I get payed on a weekly basis, i am pretty financially educated for my age and am pretty good at managing money although my current account balance may say otherwise. I set aside enough money for gas and bills every week. The last month i had an unexpected issue and had to dish out extra cash. I have been negative ever since.

    Bank of America has manipulated my transactions by every way stated in previous Replies. I have had to pay fees almost on a weekly basis and it has gotten so bad that i feel as though i am working to pay the bank. It all started with one extra transaction that made me over drawn 500 immediately. My money is on a tight budget after all is spent and invested i have almost nothing left. Even a single over draft fee sends me in a down hill slope that usually ends up in 300 to 500 dollars in overdraft fees. Fees that then recreate more fees.

    I have had to stop investing money in my mutual funds and even had to stop payment on my life insurance just to pay weekly overdraft fees. I’m going to give you the last example of how the bank overdrew my account:

    I had made several transactions this week for food and gas and my current balance last night was $8. I get payed tonight at midnight another 450. I had just gotten on the positive side of the account after paying 100 in overdraft fees last week. Today a transaction from 2 weeks ago for 300 finally shows up on bank of america (i guess that commercial where they are in the cofee shop charging and looking up to see if it shows on the website is complete Bullcrap), naturally as you all can expect the transaction were re structured so that the 300 dollars went through bringing my balance negative and the balance that was +8 is now negative 310. SIX transactions will now be charged 35 dollars, most of which are less than 10 dollars. So last night everything was positive… today conveniently enough i am over drawn 310 and expecting an additional charge of 210 in overdraft fees bringing the grand total to 520.

    This is going to take me yet another week just to bring me close to being positive, but still negative. Leaving no money for food or gas for the week. If i set aside money for food and gas it will leave my account negative which will then allow my bills that i have to pay create more fees. Or i can choose no to pay the bill this week and pray nothing gets cut off light cable or light or water. Everytime i get back to a positive state a transaction manages to put me back at negative, and instead of charging me once which i can then pay off and get back to positive, the bank rearranges my pending transactions to create 500 dollars more negative. Most of my transactions are left pending for 3 to 5 days and then ALWAYS post on thursday, just before my check comes in to take care of it.

    It gets worse… the few times i have managed to pay everything back to positive even after the bank tried to screw me i am still charged the overdraft from pending transactions, which makes no sense at all… since its “pending” no money has gone anywhere…

    And as if that wasnt enough.. some of my bills go through, make my account negative, then they redeposit the money making it positive again to be charged on a later day but the bank still charges me 35 dollars.

    This has been going on for 2 months now, i have lost so much time and money because of this. Not only lost money by paying fees but lost money that i could be investing and the such. I am angry and frustrated… if i could just catch a break one week i could stay positive permanently, but every week the bank manages to shaft me since my balances stay relatively low. I have adjusted my spending so many times and the bank just adjustes the way they post my transactions. That is how i managed to find this site, just by googling out of shear frustration. I am unable to get ahead because i make so little and have to do so much with my money. I’m always trying to make a dollar out of 10 cents and the banks profit every week.

    I have spoken to the bank as many of you have and i have just received run arrounds and give Bullcrap reason as all of you have.

    I apologize again for the block of text. Best of luck to you all.

    Sincerely stuck in the rat race,
    – JcT

    Ps: due to the horrid economy i was ALMOST layed off last friday. I can’t imagine what i would do with these fees and bills if i lose my job, i pray none of you lose your jobs. god bless.

    Pss: Why do people raise prises to make up for loss revenue? That makes matters worse for everyone, lower prices so people spend and make up for loss profit later on. Raising prices will just make people not want to buy, people are so damn selfish and greddy now a days.. ARGGHH!!

  18. JcT Says:

    Oh i also just remember, i had about 5 accounts opened, each account with a specific purpose so that money would be distributed evenly and set aside for the required nesecities. It consisted of 3 checking and 2 savings, 2 checking accounts were linked to the 2 savings account for overdraft protection. The way it was explained to me at the bank was that overdraft protection only worked between a checking and a savings account. I since then closed all savings and left myself with 2 checking accounts.

    Yesteday i had 25 dollars in the second checking and 8 on the now 310 overdrawn account. I had purchased gas this morning for 25 dollars on the account that had 25 dollars in it which would normally bring it to a Zero dollar balance until i get payed today.

    Well the bank took it upon itself to somehow make overdraft protection be available between my two checking accounts so the 25 dollars was taken to pay a portion of the 300 dollars which over drew my account, thus bringing that account to zero and my gas purchase today making my account over drawn there as well.. lol.. gotta love the way it works huh?

    I never agreed or placed overdraft protection between those two accounts, and as a matter of fact, i didnt even know that was possible. I was told it could only work between a checking and a savings, not two checking.

    Congratulations Bank of america, i hope your billions of dollars in overdraft fee revenue is worth messing people’s lives. Some of us poor folk are trying to get out of the rat race, thanks for making it easy.

  19. Coolgirl Says:

    I am in the same situation. The only way to stop the over draft fees with Bank of America is to close your account. I have been a customer there for 11 years and this is a new problem. I am going to speak to the corporate office about this, since they have charged me $600 in overdraft fees in the last month, and today I was unable to pay my rent (which was already late) since they took away most of my paycheck. I am going to open an account at a credit union, and from now on I will cash my check, go to Walmart to pay my bills via Western Union, and will not use a debit card.

  20. Stop NSF! Says:

    I would like to alert everyone to the Stop NSF! Facebook page. If you have a Facebook account, join…!

  21. Is it "anti-bank" to want to keep your money? « Wesabe: Your Money. Your Community. Says:

    […] say about me is that I’m “anti-bank.” I assume they say this because of posts like this one, where I derided Wachovia’s overdraft policies. So, am I […]

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