There are several financial institutions currently under review for how they determine banking fees. The San Francisco bay area is home to one of them. Investigators are looking into whether Meriwest Credit Union overdraft fees are excessive and arrived at through a questionable practice known as resequencing.

This resequencing practice as well as just an excessive fee structure is being investigated at Bank of Oklahoma, Boeing Employees Credit Union, People’s United Bank, Alliant Credit Union, First Hawaiian Bank, American Airlines Federal Credit Union, Commerce Bank, Pentagon Federal Credit Union, UMB Bank, America First Credit Union, HSBC Bank, and First Technology Credit Union as well.

Meriwest Credit Union Overdraft Fees and Resequencing

The practice of resequencing and its consequence, overdraft fees, may be more often felt by bank or credit union patrons that live from paycheck to paycheck.

The nearer payday approaches for such people, the more likely their account balance is to be relatively low. As check and debit transactions come into the bank for processing against these accounts, there will be higher and lower amounts.

The financial institution has total control behind the scenes as to which transactions to process first. The larger ones may not come into the bank first, but management and staff may reorder them so that they are processed first and bring the account into an overdraft status sooner. Meriwest Credit Union overdraft fees may well be arrived at in this manner.

Meriwest Credit Union overdraft fees are $35 per event. This can be assessed on an account an unlimited number of times a day. If the credit union processes the larger amount transaction at a vulnerable time for a lower income patron – say near the end of a paycheck with less than a $100 in his or her account – the account might be quickly brought below zero.

This first transaction would incur a $35 fee if paid by the credit union. Other pending transactions would also each incur $35 fees. If the issue isn’t caught by the account holder on that day and remedied early, several separate Meriwest Credit Union overdraft fees may build-up causing a really difficult situation for the patron.

What does this practice mean for low to moderate income bank patrons? It means that once payday comes, a significant amount of money needed to live until the next paycheck is taken out of their current income to pay the credit union for overdraft fees. This can cause a vicious cycle that occurs thereafter near the end of each pay period.

Overdraft Protection Plans

Several of the named financial institutions and many others offer overdraft protection plans which might cause other difficulties for bank and credit union customers.

Overdraft protection plans frequently offer a lower cost option by allowing a patron to link a savings account or have a line of credit attached to their main checking accounts. With linked account options, money is transferred from a savings account into the account going into overdraft status to cover transactions. There is often still a fee, but it is often significantly less than ordinary overdraft protection fees.

It should be noted, however, that it does draw on the customer’s savings account, giving them less to rely on during periods of need. If linked to a line of credit, the service allows that same customer to accumulate debt at interest.

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