The amount charged for overdraft fees may be more than the consumer anticipates at Trustmark National Bank and others around the country.

Founded in Mississippi, Trustmark has expanded into Tennessee, Florida, Texas, and Alabama. Trustmark Corporation boasts $13.5 billion in assets; in addition to Trustmark National Bank, subsidiaries include Trustmark Investment Advisors Inc. and Fisher Brown Bottrell Insurance Inc.

According to Trustmark’s website, the bank charges $36 per overdraft fee and $36 per non-sufficient funds (NSF) fee. The bank says a maximum of five NSF or overdraft fees (or a combined number of five) per account per day is the maximum an account can incur.

Overdraft Fees: Overview

Overdraft fees are charged to a consumer when they attempt to complete a transaction that exceeds the amount of money in their account. Instead of denying the transaction, overdraft protection allows the purchases to proceed – either by allowing a negative balance in the account or by transferring money in from a savings account or linked line of credit.

One important note: overdraft fees can only be charged to your bank account if you have opted in to your bank’s overdraft protection program. If you do not want to be charged these fees, the easiest way to avoid them is to not enroll in the programs. Should you be charged an overdraft fee but don’t recollect signing up for overdraft protection, reach out to your bank.

The amount a bank will charge in overdraft fees will vary, but the average overdraft fee will run a consumer around $34. Although these fees may seem mild, they can quickly add up to significant costs. Credit Karma notes that frequent over drafters pay around $450 more in overdraft fees each year when compared to someone who isn’t enrolled in their bank’s overdraft protection program.

Together, Americans reportedly pay $17 billion in overdraft and NSF fees each year, according to the Consumer Financial Protection Bureau. This reportedly amounts to the largest banking-related expense posed to consumers who have a checking account. These fees are also a source of profits for banks and credit unions.

Although the CFPB says that most overdraft fees end up repaid within three days for transactions of $24 or less, this has shocking implications when framed in a lending perspective. A loan for $24 which results in an additional $34 charge despite being repaid within three days would have a sky high APR of 17,000 percent.

How Banks Assess Charges for Overdraft Status

In this digital age, it seems we should be able to check our bank account balance in real-time and trust the figures we see. Not so fast, according to an article from Forbes.

Pending transactions may affect your checking account balance even if we cannot see them on our phone’s banking app. For example, if today is Saturday and you scheduled a $150 utility payment to be paid on the upcoming Monday through your bank’s app, you may be able to see a balance on your checking account that doesn’t yet include the $150 payment.

However, behind-the-scenes, the bank is already in the process of sending that $150 to your utility company. So if you use your debit card before Monday, you might incur an overdraft fee as if that $150 payment had already cleared your account.

A Rigged System?

Even if you plan to make a deposit on a certain day, you can’t count on the posting of items to result in a consistently positive cash balance.

Jerry Silver, a research director at IDC Financial Insights, told Forbes, “For people who count on timing things, it’s getting harder and harder to play the game.”

Both large and small financial institutions may be overcharging customers by administering unfair non-sufficient fund fees or overdraft fees. Despite a law that went into effect in 2010 requiring banks to have customers affirmatively opt-in to an overdraft protection program, many consumers don’t remember being provided that option.

In 2015, Pew Charitable Trusts conducted a study that found many banks continue to process transactions in an order that will generate the maximum number of overdraft fees. For example, if you have $500 in your checking account, and you write four checks for $100 and one check for $400, you would have one overdraft fee if they processed the four checks for $100 first. If the bank processes the $400 check and then each of the $100 checks, the bank could assess three overdraft fees charges.

A Cash Cow For Financial Institutions

According to financial data from Moebs Services, Americans paid more than $34 billion in overdraft fees in 2018 alone. Many banks now charge about $36 per overdraft fee, compared to $20 back in the year 2000.

Over the course of the prior year, banks and credit unions made nearly $11.5 billion from overdraft fees, according to the Federal Depositors Insurance Corporation. According to business columnist David Lazarus writing in the L.A. Times, overdraft fees now account for over one-third of bank revenue. He reported that during the first three months of 2019, nearly 32 percent of financial institution revenues were derived from “non-interest” sources, i.e., bank fees such as those charged on overdrafts.

Unfortunately, there are no laws at present that would limit how much a bank or credit union can charge for overdrafts.

Lazarus also reported that at least one online bank, Discover, has started to change its ways in response to consumer pressure and recognition of the unreasonable burden such fees place on consumers, particularly those who much live paycheck-to-paycheck.

Avoiding Overdraft Fees

One way of avoiding excessive overdraft fees is to link another account, such as a savings account, to your checking account. This way, if your checking account doesn’t have enough funds to cover a transaction, the money will automatically be transferred from the savings account. This service does not come free of charge (it is generally between $2 and $10 per transaction), but it is far less expensive than overdraft protection.

Some credit unions will also waive a certain number of overdraft fees per year if an account holder asks them to and have they been with the institution long enough.

Who are the Big Offenders?

Trustmark National Bank, Bank of America, Capital One, Navy Federal Credit Union and Digital Federal Credit Union are among the financial institutions currently under investigation regarding their overdraft fee practices. Checking in with a knowledgeable overdraft fees attorney can help you decide what action to take if you’ve been assessed an overdraft fee unfairly.

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.