Overdraft fees can sometimes become excessive. So many banks and credit unions put a daily limit on overdraft fees for their customers, which can help keep them from being hit too hard financially.

Other financial institutions, including Meriwest Credit Union, have no such daily limit on overdraft fees, which allows these fees to build up.

According to Meriwest’s current overdraft policies, customers will be charged a $35 fee per overdraft, and there is no daily limit on overdraft fees that will prevent these fees from compounding.

What is Overdraft Protection?

Overdraft protection programs are a common enough offering of both banks and credit unions. These programs, including the one offered by Meriwest Credit Union, gives customers a certain amount of cushion upon overdrawing their account.

Overdraft protection means that, instead of hitting the bottom of their account and being unable to afford to make the transaction, customers can make the transaction and are charged an overdraft fee to cover the transfer of funds.

While for many customers, overdraft protection has been very useful, they can actually cause significant financial problems—especially when a bank or credit union does not impose a daily limit on overdraft fees.

Without such a limit, overdraft fees can build up quickly to exorbitant amounts—especially when compounded by deceptive practices that encourage even more overdrawing. Indeed, banks and credit unions may even purposely reorder transactions to ensure they charge their customers the most in overdraft fees that they possibly can.

There are a few approaches that banks and credit unions can use to get even more money out of their customers through overdraft protection programs. When customers are initially signing up for an account, employees may either misrepresent the full scope of the overdraft program, fail to explain the details, or downplay the high prices.

Customers may find that they are not even given a chance to opt out of overdraft protection at Meriwest or elsewhere, and may not even know that this option is available.

A bank or credit union can even intentionally reorder customer transactions to force them to pay more in overdraft fees. Normally, banks process customer transactions chronologically, or the order in which they are made.

But some institutions can purposely reorder transactions before processing, sometimes ordering them from highest to lowest payment. This can have a surprisingly significant effect on overdraft fees.

Indeed, if all the large payments come first, each sequential payment that a customer makes is more likely to overdraw the account. Each payment on an overdrawn account will incur its own, individual overdraft fee.

Filing a Lawsuit Over Overdraft Protection Fees

Some customers who have been affected by excessive overdraft fees and deceptive practices have begun filing lawsuits against their banks and credit unions. If you have been subjected to unfair overdraft practices through overdraft protection at Meriwest or another financial institution, you may be able to join a class action overdraft fees lawsuit.

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