As with many of the larger financial institutions of our time, Capital One Bank offers overdraft protection for customers’ checking accounts. For customers who have opted into Next Day Grace overdraft protection, the Capital One overdraft fee is not an atypical amount in today’s market at $35 per transaction.

But the Capital One overdraft fee is just one part of an overdraft fee policy and group of practices that can hit the poorest bank patrons the hardest–the account-holders who truly live from paycheck to paycheck.

While the financial institution might seem to offer several overdraft protection choices, in reality, those protection choices might in fact be more expensive to the consumer that a mere $35, depending on how these options are used.

According to the Capital One overdraft fee option webpage, the financial giant offers four options for checking customers, in terms of overdraft actions or non-actions the bank can take on your behalf – Auto-Decline, Free Savings Transfer, Overdraft Line of Credit, and Next Day Grace.

The first Capital One overdraft fee option is Auto-Decline. This essentially means that you give the bank general permission to decline transactions that would put your account in to an overdraft status. This means that automatic teller machine (ATM) and everyday debit card transactions will be declined at the machine or register if they will put your account into a negative balance state.

The second among the Capital one overdraft fee options could be dicey for bank patrons with lesser financial means, assuming of course that they have been able to squirrel away a modest amount of savings over time. This option is Free Savings Transfer, which means that in lieu of charging $35 per transaction that would take the associated account below zero, the bank has permission to remove the funds from a savings account that is linked to the checking account in question.

Another Capital One overdraft fee option is Overdraft Line of Credit. This option is basically a loan which can have a high interest rate associated with it and can compound the expense of the overdraft very quickly if left ill-attended by the bank patron. It is something like a credit card account without a card.

Among the most benign of the Capital One overdraft fee options is the Next Day Grace option. It pays the overdraft transaction and allows 24 hours for patrons to notice they have gone into a negative balance state before a Capital One overdraft fee of $35 is assessed.

A discussion of these options is not complete without touching on a common practice among larger financial institutions that is coming under scrutiny in the last few years – the practice of reordering transactions. While Capital One’s transaction order isn’t plainly stated in its Account Disclosures, some banks have been known to process transactions in order of largest to smallest, regardless of the order in which they’re presented to pay for it. This is likely to purposefully bring the account to a zero or below state the fastest, which is to the bank’s favor and not to its customer.

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