Banks and credit unions make billions of dollars every year by charging overdraft fees, often called overdraft protection by people in the banking industry.

Several financial institutions are being investigated for their policies and procedures regarding overdraft fees.

VyStar Credit Union overdraft fee practices are among those under scrutiny.

While new laws have tried to make it more difficult for banks and credit unions to take advantage of consumers, many people cannot recall whether or not they opted in to an overdraft protection program.

Overdraft Protection

In a survey published by Pew Charitable Trusts, more than half the people who overdrafted in 2014 didn’t remember enrolling in their bank’s overdraft protection program.

When a bank or credit union charges a consumer an overdraft fee when that consumer did not sign up for such “protection,” the consumer could have a legal claim.

“Overdraft protection” is when a bank charges a customer a fee to allow a debit card purchase or ATM withdrawal to proceed even if there are insufficient funds to cover such a transaction. An SNL Financial and CNN Money study determined the average overdraft fee to be $34. VyStar Credit Union charges an overdraft fee of $32.

VyStar Credit Union Overdraft Fee Practices

Banks and credit unions have been accused of posting debits and credits in a certain order to maximize the number of overdraft fees they can collect.

In an online statement regarding VyStar Credit Union overdraft fee practices, the credit union says that “checks, crafts, transactions and other items may not be processed in the order that you make them or in the order that we receive them…we may, at our discretion,… execute other transactions on your account in any order we choose.”

In an even more blatant statement, VyStar Credit Union overdraft fee practices admit that the order in which items are processed “may affect the total amount of overdraft fees that may be charged to your account.”

This means if you have $100 in your account, and you make three purchases of $20, $35 and $95 in that order, you would occur one overdraft charge for the $95 purchase. If VyStar processes them in reverse order of $95, $35 and $20, you would incur two overdraft charges.

Be an Informed and Alert Consumer

It’s necessary to read the fine print of any legal document, but especially important when it affects your financial situation.

Most banks and credit unions allow consumers to sign up for a low-balance alert that arrives in the form of a text message or email.

Normally, the customer can choose the amount that generates such an alert. When you’re aware of the balance, you are more apt to take steps to avoid being overdrawn in the first place.

Being aware of your financial situation is the best way to avoid being a victim of VyStar Credit Union overdraft fee practices or similar policies.

If you have incurred overdraft fees, you may benefit from a class action lawsuit against the bank or credit union that imposed the fees.

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