Americans furious about overdraft handling

Hat tip: Bruen/Bensley blog:

An article about three phantom overdraft fees on the Consumerist has generated a firestorm of discussion. As of today, June 4, this May 28th, 2008 posting has generated 156 comments, and has been viewed 19,773 times. Here is the beginning of the story:

Bank of America charged Jason three overdraft fees for the hell of it, even though his account balance never approached $0. Jason called the bank for an explanation, and was told that due to some mathematical wormhole controlled exclusively by Bank of America, he now owed $105. Tired of the bank’s nonsensical jibber-jabber, Jason printed out his statement and headed to the local branch…

The offending bank, Bank of America, is blasted repeatedly. Surprisingly, credit unions don’t appear to be the saviors, as certain CUs are accused of doing the same type of thing. Other banks do get heat, as is the consumer in this case, for running his account so close to zero.

The emotional outpouring over how the bank is trying to screw over the consumer is truly amazing. It’s well worth the read. About half way through the first hundred comments, a reader points out 5/3 Bank’s new overdraft scheme reported on the Consumerist on May 2, 2008. Here’s the beginning of that story, which generated 49 comments and 9,756 views:

5/3 Bank decided to rape customers for more fees by changing their policy for handling transactions.

They’re now counting pending debit card transactions against the ledger balance. Following up on a reader complaint, here’s what Doug Grieme, 5/3 customer service rep, told us how the new “system” works:

“Start with the Account balance from the previous day. Minus Pending debit card transactions made before 7pm. Minus the posted transactions from the Statement activity from the day of overdraft.”

What conclusions do you draw from this article and its ensuing response?

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9 Responses to “Americans furious about overdraft handling”

  1. Ross Graham Says:

    I cancel any and all overdraft on my transaction accounts. I don’t want to have to pay a fee for a mistake that I may have made … or that a financial institution may have made.

    Rather, I’d just like the transaction to come to a halt with the card that won’t work, swap out to a new one, or just take that as a sign that I shouldn’t be buying whatever I’m trying to buy in the first place.

    By the way, I never use checks.

    Sure … the world probably doesn’t run this way. But is $30 or whatever a financial institution charges for overdraft fees worth the convenience of buying that bottle of OJ that tossed you over the edge? Doubtful. And I bet it would be seen as doubtful for any purchase.

    Overdraft. Bad bad bad.
    Oops. Sorry Morriss. I didn’t read the article. Hope you’re well!

  2. Ben Rogers Says:

    I’m in the thick of this right now. My checking account is at Bank of America (gasp, I know, I know … I can’t give up the online billpay), and when I called them up to say I wanted to turn overdraft off, they told me they couldn’t do it. A little dazed, I let it go, and in retrospect I probably should have pushed harder.

    It just goes to show how important fee income has gotten. Nobody wants to give it up. But I think free overdrafts are going to be the next big freebie, kind of like ING and USAA allowing ATM use for free.

  3. Mike Bartoo Says:

    Ben – that’s an interesting scenario, they “can’t” do it. I don’t see a snowball’s chance in you-know-where that you’ll see overdrafts for free. FIs are struggling to put together a positive ROA now and that’s WITH the revenue generated from these fees. They simply can’t afford (at least most of them) to go without that income. The ones that can – want to talk about a REAL product differentiator!!

  4. VSelfridge Says:

    Overdrafts are never free?… That makes me wonder if the CU I work for should tout their Courtesy Pay feature even more… We don’t charge a Courtesy Pay fee if you take your account up to $10 negative. (Assuming – of course – that your account is in good standing / eligible for Courtesy Pay, and that you haven’t asked for Courtesy Pay to be turned off on your account.)

    Some people do play it close to $0 – and sometimes their math is wrong. And – maybe it’s just credit unions – if you explain your error and aren’t a “habitual error maker” – maybe they’ll even reverse your fee once and a while.

    Hmmm…

  5. hirocko Says:

    I bank with 5/3rd and they managed to charge me 120 dollars in overdraft for going over 1.28 in a weekend and then turned around and made me pay 97 for going 2 dollars over the next pay period. So dont bank with 5/3 unless you have really good math and a screwed up since of logic. They take the money out for a pending which means the transaction was paid right no. They take it and then put it back in later so you get charged as much as they can charge you. I love the statement that I got from a customer service rep when I asked him about my online statement. They told me I couldnt go off of that. So online banking is actually a false statement if I cant go off of what is online.

  6. Rabble Rouser Says:

    We went through a hard time and were dancing too close to zero and got nailed by Wells Fargo. Our CU doesn’t charge for overdraft if it comes from our savings. FirstMark – thank you.

    I tell everyone to stop using debit cards, period. Unless you always have a few extra $100 in your account you are going to slip up. With a credit card you can pay it off every time – and never go over.

  7. J Simpson Says:

    Yea 5/3 are a bunch of crooks. I closed 3 of my accounts with them over overdraft issues. CS bank will only charge an OD fee per day NOT per tansaction…It’s still a good deterrent, but doesnt rape you.

    Dont ever bank with 5/3. If you ever do go over…yur hosed!

  8. Derek Peters Says:

    http://www.facebook.com/editgroup.php?gid=121593654564992&sk=members

  9. House of cds Says:

    House of cds

    Americans furious about overdraft handling | EverythingCU.com World 2.0 Adventure

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