In recent months, many banks and credit unions, like Nationwide Mutual Insurance Bank, have come under scrutiny for charging excessive or overdraft fees and other alleged improper overdraft practices.

As of July 2010, all financial institutions, including Nationwide Mutual Insurance Bank, were mandated to have customers opt in to overdraft protection programs.

However, many customers are still confused about what their options are regarding overdraft fees, as many banks may be not be disclosing the true nature of their overdraft practices.

Nationwide Mutual Insurance Bank Overdraft Option

Nationwide Mutual Insurance Bank offers customers overdraft protection by linking a customer’s checking account with a savings or money market account.

According to the bank’s website, overdraft fees can be imposed for transactions whether they are done by check, an in-person withdrawal, an ATM withdrawal or some other electronic mean.

The bank charges a $5 fee to withdraw funds from a linked savings account to cover an overdraft.  However, the fee is assessed per day so if a customer overdraws their account on three separate days, there will be three separate $5 overdraft fees charged.

While, Nationwide Mutual Insurance Bank touts some of the lowest overdraft fees, recent lawsuits against many large banks allege that consumers are being victimized by unfair and deceptive overdraft practices regarding overdraft fees.

Overdraft Practices Explained

For one-time debit card transactions and ATM withdrawals, banks and credit unions cannot charge an overdraft fee unless a customer opt ins.

However, banks and credit unions are allowed to charge overdraft fees when the bank or credit union pays a check or certain recurring electronic payments that would have overdrawn a customer’s account, even if they did not opt in.

Some banks may also allow customers to opt-out of overdrafts for checks and other types of payments. However, consumers that decline overdraft coverage for checks or ACH transactions may be charged a non-sufficient funds (NSF) fee from the bank or credit union, which is generally the same amount as an overdraft fee.

In addition, declined payments to merchants may trigger a returned item fee from the merchant.

Many banks automatically enroll customers in overdraft protection plans, so customers may be unaware of the consequences of making a purchase when there are insufficient funds in their accounts.

In addition, the overdraft fees may be disproportionate to the amount of the purchase. For example, a $5.00 purchase may incur a $35.00 overdraft fee.

Unfair Overdraft Fees?

Many banks automatically enroll their customers in overdraft protection plans, touting them as providing peace of mind and convenience.

In theory, these overdraft practices protect consumers by providing that the bank will not refuse a check or debit card transaction for insufficient funds. This service can save consumers from embarrassment, inconvenience, and in some instances, even criminal prosecution.

But some consumers have complained that banks may be charging excessive overdraft fees. In addition, customers claim they are not fully informed about how the overdraft fees are calculated, which causes confusion.

Consumers claim that many banks and credit unions’ overdraft programs assess fees on the available balance, which, in turn, may cause an overdraft fee to occur even if the actual account balance did not go negative.

Because of these alleged unfair overdraft fees, many banks like Nationwide Insurance Mutual Bank, are under increased scrutiny for their overdraft practices.

Consumers who suspect they are being charged improper overdraft fees may want to consider speaking with an attorney, who can help determine if the charges were proper or improper and advise about possibly bringing an overdraft fees lawsuit.

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