The Patelco credit union overdraft fee is just one of several fees related to insufficient funds that may be charged to bank or credit union customers when they don’t have enough in an account to cover a transaction.

According to the Patelco credit union member handbook, if an account is set up to have a linked account automatically transfer funds from it into a checking account in danger of “going into the red,” no Patelco credit union overdraft fee is assessed. But when the credit union pays an overdraft transaction and allows the account balance to go negative, then it may assess a Patelco credit union overdraft fee.

In the terms of this financial organization, the Patelco credit union overdraft fee is referred to as a Paid NSF. Changing the verbiage doesn’t change the effect it has upon thousands of bank and credit union customers when they are subjected to charges of $28 per incident.

Credit unions and banks alike can take steps to increase the number of overdraft fees their customers have to pay. One common method for increasing overdraft fee would be to reorder incoming checking account transactions in such a manner that the ones with the highest value are processed first rather than in a purely chronological fashion.

This method of speeding the process of getting an account to a zero or below balance secures an additional means of profit for the bank or credit union. In an age where patrons are able to check their accounts online daily and overdrafting has become more rare, this method of ordering transactions has reportedly become more common. Unfortunately, it affects those of low to moderate incomes the most, according to consumer advocates.

As an example, if you had $100 to live four days on until your next payday and you made four necessary transactions on each of those four days of $10, $35, $15, and $45 respectively, you might have hope that your direct paycheck deposit would clear prior to the last chronological debit—saving you from additional costs.

When banks and credit unions reorder the transactions, however, they actually may process the last and highest amount first against the account’s register. This then would be followed by the $35 charge, the $15 charge, and the $10 charge.

The place you would arrive at would be the same—a negative balance of $5. Getting to that place more quickly, however, means that there is less chance that the incoming funds will cover expenditures in the game of financial roulette that people of limited means often have to play.

The negative balance will likely trigger an overdraft fee which will then have to paid from available funds in the next pay period. This is a vicious circle in which many get trapped.

Rules passed in August 2010 stipulated that banks and credit unions couldn’t charge their patrons overdraft fees on ATM and most debit card transactions unless they affirmatively opt into overdraft protection when they open their accounts. Once the customer opts into this extra overdraft protection, however, they’re at risk for incurring overdraft fees for a whole new set of transactions.

You may have a legal claim if your were charged excessive overdraft fees by one of these banks or credit unions:

• Alliant Credit Union
• Astoria Bank
• BECU (Boeing Employees Credit Union)
• Nationwide
• Pacific Western
• Patelco Credit Union
• State Employees Federal Credit Union (SEFCU – New York)
• Sterling Bank
• Educational Employees Credit Union (California)

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