Many bank and credit union customers are hit with excessive overdraft charges that they consider unfair and that they may be unable to pay. These excessive overdraft charges can add up quickly and some customers are claiming that banks may not have their best interests in mind.

What is an Overdraft Fee?

Many customers never need overdraft protection service from a bank or credit union. But most banks and credit unions offer overdraft protection services to their clients as an opt-in service. However, many customers say these services have resulted in excessive overdraft charges.

When a customer “overdraws” his or her account, it means that there have been transactions equalling a greater amount than there is money in a customer’s account. Their account is “in the red,” so to speak. The customer may not have been aware that they have spent more money than they have in their account.

When a customer opts in to an overdraft protection program, the bank or credit union covers a transaction charge if it is over or above what the customer has in his or her account. Sometimes this money is taken from a savings account or another account the customer might have. Sometimes this money is taken from a type of overdraft credit line that must be paid back by the customer.

In addition to paying the money back, the customer may also be charged an overdraft fee. Many times these fees can range from $25 to $35 per overdrawn transaction. Many customers think that these excessive overdraft charges are unfair and that banks should be held accountable.

Overdraft Protection Fees

Often customers who use overdraft protection services do not have extra money in their accounts, so excessive overdraft charges can drain their account even further. Some banks even charge customers a fee for each day their account is below $0.00. For example, if an account is overdrawn at the end of the day for a week, that customer may be charged an additional fee on top of the overdraft fee he or she is charged per transaction.

Certain banks and credit unions have been accused of reordering transactions. When a customer makes a transaction, he or she expects it to appear in his or her account in the order that it was made. For example, a $5 charge made in the morning should appear before a $40 charge made in the afternoon. However, some banks have been accused of purposefully clearing larger transactions before smaller ones with the intent to drain a customer’s account quickly so that more overdraft fees can be assessed.

Using the above example, a bank or credit union engaging in that type of behavior might clear a $40 charge before the $5 charge. If the customer’s account had little money in it, he or she might now have two overdrawn transactions rather than just one.

While banks and credit unions make a profit off of these charges, practices like this many customers wonder if they have unfairly been hit with excessive overdraft charges.

If you believe your bank or credit union has charged you unfair and excessive overdraft charges, you may benefit from speaking with an experienced attorney.

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