Meriwest Credit Union offers standard overdraft protection and several advanced overdraft protection plans. However, the transaction posting order by the institution can affect how fees are assessed under these plans.

Meriwest’s standard overdraft protection is called Courtesy Pay Overdraft Privilege. At its discretion, Meriwest authorizes and pays overdrafts for checks and other transactions made with the customer’s checking account number and automatic bill payments.

Courtesy Pay Overdraft Privilege overdraft protection will not authorize or pay overdrafts for ATM transactions or everyday debit card transactions unless the customer contacts Meriwest’s operational support and explicitly authorizes the credit union to do so.

Meriwest’s other overdraft protections include links to either a savings account or line of credit, which its website claims “may be less expensive than our standard overdraft practices.”

Transaction Posting Order Influences Overdraft Fees

Each time the credit union covers an overdraft, Meriwest charges a $35 overdraft fee. Overdraft fees at Meriwest have no limit to the number that can be assessed per day. Many other financial institutions set a limit, such as two overdraft fees per day.

Consumers are likely to view excessive overdraft fees as a hardship, but these same fees are seen by some financial institutions as a way to diversify their sources of revenue. Banks and credit unions felt pressured to find a new source of income as interest rates remained low for many years.

“Income from fees for services has grown considerably over time,” states a report by The Pew Charitable Trusts. “In 1984, fee revenue was small compared with income earned from interest. By 2015, this gap had narrowed substantially.”

Financial institutions have been accused of manipulating the transaction posting order of debits and credits to maximize the number of overdraft fees they can collect.

For example, if you have $100 in your account, and you make three purchases of $20, $35 and $95 in that order, and the transactions post in that same order, you would occur one overdraft charge for the $95 purchase. If Meriwest processes them in reverse order of $95, $35 and $20, you would incur two overdraft charges. The transaction posting order can result in greater or fewer overdraft charges.

Some Meriwest account holders report the transaction posting order was manipulated so that the credit union could charge them overdraft fees they wouldn’t have incurred otherwise. Earlier deposits were allegedly processed after later debits, causing the debits to incur an overdraft fee.

The Consumer Financial Protection Bureau (CFPB) reports that of all the ways a transaction can be made, debit cards hold the lowest median value, $24, of financial transactions that lead to overdrafts. The median overdraft fee was $34. If overdraft protection for that transaction were thought of as a loan, the CFPB says, “[s]uch a loan would carry a 17,000 percent annual percentage rate.”

The Pew Charitable Trust shared a national survey that showed 87 percent of consumers who incur overdraft fees are somewhat or very concerned about the price they pay for overdraft service. Most would prefer to have a transaction declined than incur a $35 fee, especially when the fee is a greater price than the price of the original transaction.

If you have experienced excessive overdraft fees due to transaction posting order or other issues at Meriwest or any other financial institution, you could benefit from legal representation.

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