Overdraft fees are often touted by banks and credit unions as being for their customers’ protection—indeed, these programs are often called overdraft protection programs. However, more and more people are encountering real issues with these overdraft programs, when they are consistently hit with high fees, when they are charged excessive amounts of fees because of transaction reordering, and more.

Have You Been Charged Banner Bank ATM Overdraft Fees?

When you opt into an overdraft protection program, overdraft fees can generally be charged on ATM and debit card transactions that would otherwise overdraw your account and prevent the transaction from taking place. The same is true at Banner Bank.

Banner Bank is a commercial bank based in Walla Walla, Wash., founded in 1890, with locations in Washington, Oregon, Idaho, and California.

Overdraft protection programs are widely touted by financial institutions as being for the customer’s benefit, but in many cases, they may actually be more trouble than they’re worth, causing more of a financial struggle than they prevent.

Banner Bank is one of the many banks currently being investigated for potentially using unfair practices to generate the largest amount of overdraft fees it can. This is a common approach for financial institutions, as they make a great deal of money off of the overdraft fees they charge their customers. Indeed, data from the Consumer Financial Protection Bureau shows that consumers in the U.S. paid $15 billion in overdraft fees and bounced check charges in 2016, reports Credit Karma.

One of the issues with overdraft fees is that they can quickly add up. Several $35 overdraft fees in one day can cause a customer to owe more than $100 in overdraft charges—even when the transaction that pushed them over cost much less than that. This is especially true because of a process called reordering.

Banks can reorder transactions so that instead of processing them in the order they are made, they instead process from highest to lowest, thereby incurring the highest number of overdraft fees possible, as each new transaction processed is increasingly likely to push the account into overdraft, and the highest number of transactions possible will be made on the overdrawn account.

According to research from Pew Charitable Trusts, more than 40 percent of the financial institutions included in a 2016 study rearrange transactions in this manner, which can reduce the account balance more quickly, thereby incurring the highest number of overdraft fees possible.

Sadly, unfair or excessive overdraft fees disproportionately hurt lower-income Americans the most: those whose accounts are more likely to lack a real financial cushion. For these people, recovering from overdraft fees can be a difficult process. This issue has led many lower-income Americans to give up using a bank account completely, according to money.com.

If you were charged Banner Bank ATM or debit card overdraft fees, but believe that these fees were excessively high or charged unjustly, you may be able to file a lawsuit and pursue compensation.

What Do the Overdraft Fees Cover?

In general, an overdraft fee is charged when a customer who has signed up for overdraft protection attempts to make a transaction that would put their account in the negative. With this protection, the financial institution can pay for the transaction anyway, despite the customer not having enough money in their account to cover the full transaction. The financial institution then charges the customer an overdraft fee for this service.

Once charged, the customer will be required to pay back what the bank covered for them, as well as the overdraft fee amount.

Overdraft programs can cover both ATM and debit card transactions.

There are a couple of options offered for Banner Bank overdraft protection specifically—linking to a savings account or linking to a personal line of credit.

The first option is linking your savings and checking accounts with the bank. Upon overdrawing your checking account, Banner Bank will transfer funds from your linked savings account in $25 increments, though less may be transferred if the linked account is not sufficient. The transfer fee attached to this option is $9.00. These Banner Bank fees are only charged if the transfer successfully prevents the overdraft issue, the bank says.

The second option offered by Banner Bank is linking your checking account with a personal line of credit with the bank, in which the bank will transfer funds in the event of an overdraft. This doesn’t have the same kind of Banner Bank fees attached to it, and instead operates like a loan or credit card, with interest charged until the balance is successfully paid off.

Report Shows Big Banks Collected $11 Billion in Fees

The Center for Responsible Lending released a report saying that 10 of the largest banks in the U.S. collected more than $11 billion in overdraft-related fees in 2019.

“Bank overdraft fees cause particular harm to low-income consumers and communities of color, who are already disproportionately excluded from the banking mainstream,” says the report’s executive summary.

Researchers looked at the overdraft-related money collected by banks with assets of $1 billion or more.

The Center for Responsible Lending makes a case that the current average overdraft fee of $35 is “unreasonably high” considering that most of the transactions that send consumers into overdraft status are usually around $20, which is much less than the fee sanctioned in order to spend that $20.

Researchers also noted that the bank takes little risk in covering its own customers’ overdrafts because the bank is always repaid before any other payments are made. As normal course of business, as soon as a deposit is made in the overdrawn account, the bank collects its fee and the funds it originally covered, generally no more than three days after the overdraft was incurred.

Finally, due to advanced technology, the bank spends little to process an overdraft transaction; the profit margin on a $35 overdraft fee is presumably quite large.

The report says that nine percent of customers who hold bank accounts pay 84% of the overdraft fees. The typical customer in that group averages about $350 in their account.

Are Overdraft Fees Legal?

In general, yes—overdraft fees are legal. However, banks and credit unions must abide by certain rules put in place to protect consumers.

One of the most essential aspects of this is that consumers must first opt in to overdraft protection. In 2010, the Federal Reserve made it so that by default, a bank must simply reject transactions if an account does not have sufficient funds. Opting in to overdraft coverage then means transactions would be approved but an overdraft fee—usually about $35—would be charged.

Overdraft protection laws apply specifically to transactions that have not been pre-authorized, such as Banner Bank ATM withdrawals or debit card transactions. Pre-authorized withdrawals include things like recurring automatic bill payments and checks, which do not fall under overdraft protection law.

This is a particularly difficult time for Americans to be hit with overdraft fees, as many are out of work in the midst of the ongoing coronavirus pandemic. Some lawmakers are pushing for banks to stop charging both overdraft fees and non-sufficient funds fees during the pandemic.

“We must give workers and hardworking Americans the tools they need to rebuild and recover after this crisis,” Senator Sherrod Brown told CNBC Make It. “That includes making sure they can keep their money in their own pockets and out of the hands of banks to cover fees and small overdraft amounts.”

How To Avoid Overdraft Fees

Overdraft fees can quickly add up, causing many customers to dread these fees. Consumers who are worried about overdraft fees can take several steps to reduce their chances of being hit with these costly expenses.

The easiest way to avoid overdraft fees is to opt out of overdraft protection. Under financial banking regulations, banks and credit unions can only charge overdraft fees if consumers have opted into their programs. However, opting out of overdraft protection does not protect consumers from other fees such as NSF fees.

For consumers who wish to keep their overdraft protection, keeping an eye on account balances is a good way to avoid unnecessary fees. With the rise of mobile banking, consumers can check their account balances anywhere that they have cellular service. If a quick check of your account balances shows that you’re low on funds, you can be mindful of your transactions in order to avoid fees.

Similarly, some banks and credit unions may offer low balance alerts. These services send consumers a notification or text when their bank account falls below a pre-determined threshold. If you receive a low account balance alert, you can either transfer money to your account to cover future transactions or avoid unnecessary costs – both of which may help reduce the chance of an overdraft fee.

Unfortunately, even if consumers do their best to avoid overdraft fees, banks and credit unions may still charge these fees unfairly. However, there is hope. Consumers who have been victim to unfair or predatory Banner Bank ATM overdraft fee practices may be able to take legal action.

Filing an Overdraft Fees Lawsuit

A number of banks and credit unions across the country have been hit with lawsuits over their allegedly deceptive or unfair overdraft fee practices.

If you believe that your bank or credit union may have charged unfair or predatory overdraft fees, you may be able to file a lawsuit and pursue compensation. Filing a lawsuit can help compensate you for any financial losses that may have been incurred, as well as hold the financial institution responsible for practices that harm consumers.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

Join a Free Bank Overdraft Fee Class Action Lawsuit Investigation

If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf. Learn more by filling out the form on this page.

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This article is not legal advice. It is presented
for informational purposes only.