If you are a patron of Banner Bank, you may have been charged a bank overdraft fee that isn’t justified under banking regulations or your account agreement.

An overdraft fee occurs when a banking customer tries to overspend what is in their account by making a purchase of goods or services. Back in 2010, a law passed preventing overdraft fees from being assessed on ATM transactions and purchases made using a debit card, unless the account holder has opted in to overdraft protection. This process was supposed to reduce the number of fees a financial institution is able to charge, but it has had a limited effect.

How Overdraft Fees Can Add Up

The trouble with this rule is that banks are very good at convincing customers that overdraft protection is in their best interest. If you don’t opt-in, the bank will simply reject ATM and debit card transactions that exceed the available balance of your checking account.

Some recurring bills like rent and gym memberships, however, can be paid via electronic ACH transactions. Denial of this type of transaction can incur an NSF fee from your bank and often a returned item fee from the payee.

This adds up very quickly and underscores a case for overdraft protection, which gives your bank the right to choose to pay the transaction for you, saving you any charges the payee might want to levy. You will incur an overdraft fee, usually around $35, for each transaction that takes your account into the red, but that may be a small price to pay to avoid further difficulties.

For some, however, overdraft fees can make an already difficult financial situation worse.

Is Overdraft Protection in the Best Interest of the Consumer?

It’s worth noting that every year, according to reports, banks and credit unions make billions off of overdraft fees alone. Credit Karma reports that data from the Consumer Financial Protection Bureau (CFPB) in 2016 revealed that U.S. citizens paid a whopping $15 billion in bounced check and overdraft charges in aggregate.

The issue of unfair overdraft practices has gained the attention of the House Financial Service Committee, and a bill has been introduced that would help regulate unfair practices.

What Overdraft Protection Does Banner Bank Offer?

For Banner Bank patrons, there are two overdraft protection options. One is to link a savings account to your checking account. The savings account would then be drawn upon if necessary, for a smaller fee ($9) to prevent an overdraft on a given day. The other option is to establish a line of credit linked to your checking account. This operates like a loan or credit card and is charged interest until the balance is paid off.

Were You Hit With Unexpected Overdraft Fees?

Banner Bank, like so many other banks and credit unions, is being investigated for possibly using practices that may generate overdraft fees inappropriately.

Another issue consumers have been facing is unexpected overdraft fees. This can occur when their online bank account shows a different balance than they actually have available to them. This can cause them to make transactions that, unknowingly, push them into overdraft and incur fees.

One of the more recent and more widespread sketchy practices among banks is to charge an overdraft fee based on the available balance instead of on the actual balance. Suppose a customer starts with $100 in their account and makes a $30 purchase. It doesn’t post to their account right away, leaving the actual balance at $100; but the bank reduces their available balance by the amount of the transaction, down to $70.

If at that point an $80 transaction posts to the account, some banks may assess an overdraft fee. Even though there was enough money in the account to cover the transaction at the time it posted (the actual balance), the bank uses the lower available balance solely for the purpose of assessing an overdraft fee.

Historically, banks have also increased the number of overdraft fees by reordering transactions. Rather than processing transactions chronologically as they come into the financial institution, banks have made a practice of posting the largest transactions to the account first. This lowers the account balance faster, making it more likely that upcoming transactions will overdraw the account and incur a fee.

Reordering is less of a problem than it used to be now that several banks have paid millions of dollars in class action settlements to avoid claims of improper reordering.

How Can I Avoid Overdraft Fees?

The quickest and easiest way to avoid overdraft fees is to opt out of overdraft protection coverage. Unfortunately, this may not be a realistic option for consumers – especially those who rely on the safety net provided by overdraft protection.

However, if consumers are unwilling to cancel their overdraft coverage, some actions may help them avoid unnecessary fees.

Keeping an eye on available balances can be a great way to make sure transactions are covered without overdraft fees. With the rise of mobile banking, it has become simple for consumers to quickly check their account balances.

Online banking has also given rise to another method which may help consumers avoid overdraft fees – low balance alerts. These alerts can be set up to be sent to a phone or email when an account balance falls below a certain threshold. With these alerts, consumers can instantly be informed when they need to be more careful about their transactions without proactively checking their account balances.

Even if you have been charged an overdraft fee, you may be able to mitigate further fees by transferring money into your account immediately. Leaving a negative balance in your account can lead to additional fees, so restoring a normal balance may pay off in the long run. Failure to restore a negative balance can lead to over a hundred dollars in fees if consumers do not promptly remedy the situation.

Unfortunately, even if consumers are proactive and take measures to protect themselves from overdraft fees, they may still be hit with the charges if their bank or credit union utilizes deceptive measures. During the COVID crisis, senators have even proposed a bill to prohibit overdraft fees to help consumers.

Can I File an Overdraft Fee Lawsuit?

A slew of banks and credit unions have already been hit with litigation over unfair overdraft fee practices. If you have been affected by the overdraft practices listed above or other unfair practices by your bank or credit union, you may be able to file a lawsuit and pursue compensation.

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.

Learn More

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