Sarah Markley  |  July 19, 2018

Category: Consumer News

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Younger People May Pay More in Overdraft Protection Fees, Study FindsSome banks and credit unions have been under investigation recently regarding unfair practices for their overdraft protection fees policies. In fact, some financial institutions are believed to charge customers unfairly in order to reap the benefit of charging them high fees, increasing their bottom line.

What are Overdraft Protection Fees?

Overdraft protection fees
are fees levied by banks on their customers who overdraw their account. When someone spends more than he or she has in their checking account, their account is considered overdrawn.

Instead of rejecting the transaction, banks offer overdraft protection. Overdraft protection, by law, is an opt in program. If a customer opts in to their bank’s overdraft protection program, the bank agrees to approve the transaction and cover the cost of the transaction.

However, the customer must still pay back the cost of the transaction, and often in addition, must pay overdraft protection fees.

Overdraft protection fees are hefty fees that banks and credit unions charge their customers when overdraft protection is enacted. Many banks charge overdraft protection fees for each transaction that overdraws an account.

For example, suppose a bank customer makes a purchase for $10 and then another one for $50 when his or her bank account is at zero funds. If the customer has overdraft protection, then in addition to the $60 now owed, they may be hit with two overdraft protection fees, one for each transaction.

Overdraft fees typically run about $35 each, so it could cost the customer an additional $70 for those two overdrawn transactions in overdraft protection fees.

Some customers and critics claim that some banks and credit unions may be participating in methods of charging customers that are unfair. Some financial institutions have been accused of doing this on purpose to gain more money from bank customers.

Overdraft Protection Fees Higher for Younger People

Money
 reports that younger people pay more in overdraft protection fees than their older counterparts.

According to Money.com, “Younger consumers—from teens up through those in their early 30s—and minorities make up a large percentage of these ‘heavy overdrafters,’ Pew noted in a report released last year. And they’re paying a high price. If you look at overdraft transactions as loans, the ensuring fees would amount to a 17,000% annualized interest rate.”

Overdraft Protection is a $15 Billion Industry

In fact, when looking at all overdrafters, young and old alike, it is estimated that banks rake in $15 billion each year in overdraft protection fees. The Consumer Financial Protection Bureau reports that the average rate for overdraft protection fees is $34 per transaction. For many bank customers who live paycheck to paycheck, this can add up quickly driving that customer further into debt.

Even though overdraft protection programs are opt-in programs, Pew has found that over half of bank customers who use the service don’t recall actually opting in to their bank’s program. Additionally, those who use overdraft protection rack up, on average, $600 per year in fees (about 18 overdrawn transactions).

Many critics claims that banks simply want to increase their bottom line and do not really care about the well-being of their customers.

If you believe you have been charged unfairly for overdraft protection fees, you may be able to reap legal compensation. Speaking with an experienced attorney can help you determine your options.

Do YOU have a legal claim? Fill out the form on this page now for a free, immediate, and confidential case evaluation. Some of the banks and credit unions being investigated include, but are not limited to:

  • HSBC Bank
  • UMB Bank
  • State Employees Credit Union
  • Pentagon Federal Credit Union
  • Boeing Employees Credit Union
  • Alliant Credit Union
  • Star One Credit Union
  • First Technology Federal Credit Union
  • America First Credit Union
  • American Airlines Federal Credit Union
  • Alaska USA Federal Credit Union
  • Vystar Credit Union
  • Citizens Equity First Credit Union
  • Teachers Federal Credit Union
  • ESL Federal Credit Union
  • Patelco Credit Union
  • DFCU Financial Credit Union

The attorneys who work with Top Class Actions will contact you if you qualify to let you know if an individual lawsuit or class action lawsuit is best for you. Hurry — statutes of limitations may apply.

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Get Help – It’s Free

Join a Free Bank & Credit Union Overdraft Fee Class Action Lawsuit Investigation

If your bank and credit union has engaged in deceptive overdraft fee practices, you may have a legal claim. Fill out the form on this page now to find out if you qualify!

An attorney will contact you if you qualify to discuss the details of your potential case.

PLEASE NOTE: If you want to participate in this investigation, it is imperative that you reply to the law firm if they call or email you. Failing to do so may result in you not getting signed up as a client or getting you dropped as a client.

In order to properly investigate overdraft fee claims, you may be required to disclose bank statements to overdraft fee attorneys. Please note that any such information will be kept private and confidential.

  • The law firm responsible for the content of this page is: The Kick Law Firm, APC
    If an overdraft fee was incurred by a credit card, STOP. You do not qualify for this investigation.
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