There are currently several larger banks and credit unions being investigated for the methods by which they determine overdraft fees on account holder’s transactions.

A San Francisco Bay area financial institution known as Meriwest Credit Union is one of those banking organizations suspected of processing debits against accounts in an unfair manner. Meriwest Credit Union overdraft fees may have more to their overdraft fees than what is seen on the surface.

Meriwest Credit Union Overdraft Policies

Meriwest Credit Union Overdraft policy, according to the organization’s official website, is to charge a customer a $35 fee on an unlimited basis for every debit that takes an account below zero.

To clarify, every transaction that the credit union chooses at its own discretion to pay on behalf of a customer with a negative balance will come with a $35 price tag. This could occur any number of times per day in theory.

A Random Sampling of Banking Institutions

A random sampling of banking institutions such as Bank of America, Chase Bank, and U.S. Bank reveal that a $35 overdraft fee is not all that unusual in today’s financial marketplace. Bank of America charges a $35 overdraft fee per transaction fee.

They have two options for the consumer – choose to have the bank approve and pay transactions that will put the account in a negative status or choose to have the bank decline all transactions that will put the account in a negative status. Either choice will incur the fee. Bank of America will process no more than 4 per day.

Chase Bank charges their customers a $34 overdraft fee each time a transaction that would take an account into a negative balance is paid by the bank. This is unless the transaction will overdraft the account by $5 or under. Chase processes no more than 3 overdraft fees per day.

US Bank charges their customers a $36 overdraft fee each time a transaction is paid by the bank that takes the account into a negative balance unless the balance is -$5 or less. U.S. Bank processes no more than 4 overdrafts per day.

Meriwest Credit Union Overdraft policy stands apart from these big name financial institutions by the fact that they have set no limit on the number of times an overdraft charge can be levied against a customer.

Another practice which is coming under scrutiny with many banks and credit unions is transaction reordering. Meriwest Credit Union overdraft fees may be levied after the credit union has tampered with the chronology of transaction posting.

When a patron has a limited amount of funds left in his or her account prior to payday, as an example, the amount of each transaction and the order in which it is posted can make a big difference in determining whether the account goes “into the red.”

Ordering a group of transactions that all come in within a 36-hour period to favor the largest dollar amounts will almost ensure overdraft status. This reordering is a practice that is largely blind on the part of the financial institution.

We tend to take it on faith that debits are posted as they come in, but given the number of banks and credit unions currently under investigation, this practice may surprise many consumers.

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