Opening checking accounts with banks and credit unions is common practice for most consumers in America, along with being aware of the responsibilities and potential consequences.

These consequences occur when the checking account becomes void or insufficient for some reason, often bringing the consumers into greater financial debt.

Avoiding this issue is why most banks and credit unions have the consumer sign up for some form of overdraft protection. This allows the financial institutions to cover a purchase if the checking account does not have sufficient funds to do so.

When accounts become insufficient and cannot cover a purchase, money is transferred from a different account. Typically this comes from a savings or secondary checking, or a reserve account offered from the financial institution, to complete the transaction. Banks or credit unions charge a fee for the service, commonly referred to as an overdraft fee or insufficient funds fee.

These fees are often small and are designed to be paid quickly; however, a number of consumers have complained that these overdraft fees are unfairly processed or indexed, which maximized the amount of overdraft fees these financial institutions can charge.

In addition, consumers complained that they were signed up for overdraft protection without their consent so their bank or credit union could charge these fees.

As of Aug. 15, 2010, financial institutions were prohibited from charging overdraft fees to their customers unless the customers had signed up for overdraft protection. At this time, the Consumer Financial Protection Bureau is analyzing the different overdraft protection practices of these financial institutions and may soon enforce new regulations.

Overview of New York Community Bank Overdraft Protection

One of the financial institutions potentially guilty of charging unfair overdraft fees is New York Community Bank. As the name implies, New York Community Bank caters to their central states of New York and New Jersey, but also offers its services to customers from Florida, Ohio, and Arizona.

According to the bank’s website, “New York Community Bank is the largest thrift in the nation and one of the leading thrift depositories in most of the markets we serve.” New York Community Bank advertises itself as a convenient way of banking to its customers, with 248 locations offering 24 hour ATM services and 211 locations open six days a week.

The overdraft protection offered by New York Community Bank is fairly typical, stating that it will link the primary checking account with other savings or checking counts to prevent the occurrence of a bounced check or declined debit card.

Their overdraft protection program offers to transfer the money to insufficient accounts, but does not specify whether or not the customer will be charged an overdraft fee.

The bank’s website, however, does specify the number of overdraft protection transfers allowed per month – six in this case. In addition, customers of New York Community Bank also have to sign up for overdraft protection as specified by the previously mentioned federal policy.

Banks and credit unions have both been allegedly charging improper overdraft fees after being impacted by the negative effects of the country’s fluctuating economy.

Customers who have been illegally charged with overdraft fees, may be eligible to file legal action against the bank or credit union who imposed the charges. Potential claimants should contact a specialized lawyer to determine if they have an overdraft fee lawsuit.

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