South State Bank customers may be able to opt into overdraft coverage in order to avoid paying fees when their accounts are overdrawn.

Why Are You Being Charged a South State Bank Overdraft Fee?

A bank overdraft fee is charged by a financial institution after a customer attempts to make a purchase or transaction when there are not adequate funds in their account. When the customer has opted-in to an overdraft protection policy, the bank will cover the transaction and assess a fee. According to South State Bank’s overdraft fee policy, it charges $35 for each overdraft, with a limit of $175 per day. South State also claims that it will not charge a fee if the account is overdrawn less than $10.

According to reports from customers at banks and credit unions across the U.S., some financial institutions may be engaging in predatory overdraft fee policies and charging customers multiple overdraft fees for a single transaction.

Overdraft fees are a major source of income for many banks. In 2019, the biggest banks in the U.S. made nearly $12 billion from overdraft fees.

Although some politicians, including New Jersey Sen. Cory Booker, have introduced bills this year that would ban banks and credit unions from assessing overdraft fees during the coronavirus pandemic, the proposals did not result in changes for most U.S. consumers. Instead, the average cost of an overdraft fee in the U.S. hit a record high in 2020. Business Insider reports that as of late October, the average overdraft fee was more than $33, .an 11-cent increase from 2019. The South State Bank overdraft fee is even higher than the national average — $35 per overdraft.

Some banks, including Bank of America and Ally Bank, waived overdraft fees in 2020 for consumers struggling to make ends meet, other banks raked in billions assessing the charges. Often, overdraft fees disproportionately affect consumers who are already financially vulnerable. Fewer than 10% of banking customers pay nearly 80% of all overdraft and non-sufficient funds fees. These consumers are likely to have low credit scores and may be members of marginalized communities. They are also likely to have an account balance of less than $350.

What is the South State Bank Overdraft Policy?

According to South State Bank’s overdraft policy, there are several types of overdraft protection including an overdraft line of credit, an automated overdraft privilege, or an overdraft sweep.

Opting into an overdraft line of credit protects customers who overdraw an account by allowing them to essentially loan themselves the funds to cover the costs. An overdraft line of credit works by transferring funds from the line of credit into the customer’s account in $100 increments once the account balance falls below $0.

The total amount transferred may be between $1,000 and $4,999, with a fixed interest rate for 10 years. Customers who choose this option are required to pay either $25 or 5 percent of the outstanding balance every month.

Overdraft sweep allows customers to link their checking account to another account at the bank. When a customer who has linked their accounts overdrafts one of them, the bank transfers funds from the other account to cover the cost of the overdraft.

The third option for South State Bank customers is an automated overdraft privilege. Customers who enroll their accounts in an automated overdraft privilege will have their non-sufficient funds’ fees paid by the bank, up to a set limit. While automated overdraft privilege covers fees for checks, bill payments, and recurring debit card transactions, it does not cover ATM and one-time debit card transactions, or insufficient items resulting from automatic transfers.

How Much Can You Overdraft With South State Bank?

South State allows customers who have chosen the overdraft line of credit to overdraft their accounts up to their credit limit of between $1,000 and $4,999.

While some banks and credit unions cap the number of overdraft fees that may be assessed against a customer’s account in a single day, it may range from four to as many as 12. South State Bank customers who have automated overdraft privilege may overdraft their account up to six times in a business day, with a fee of $36 for each time.

Should You Join an Overdraft Fee Lawsuit?

Although banks are allowed to charge overdraft fees for transactions they cover, some consumers accuse banks of violating their own fee policies by charging predatory fees. The Pew Charitable Trusts reports that many banks intentionally rearrange the order in which transactions are processed.

More than two of every five banks rearrange transactions, processing them from the largest transaction to the smallest, rather than in the order they occurred. This rearranging leads to more overdrafts and makes it difficult for consumers to keep track of how much money is in their accounts.

For example, if a customer has $50 in their account, and spends $10 on breakfast, $30 on lunch, and $60 on dinner, they may expect to only be assessed an overdraft fee on the final purchase that overdrafted their account.

However, if their bank engages in the practice of rearranging transactions, the $60 transaction may be processed first, with the smaller transactions processed afterward. In this case, the customer may be hit with three overdraft fees stemming from a single original transaction. If you have been assessed multiple South State Bank overdraft fees for a single overdraft, you may be able to speak with an attorney about your legal options.

Although many customers keep track of their account balances by checking their online statements, some customers have reported that these numbers are not always accurate. Banks may include the amount that a customer is allowed to overdraft in the “available balance” that shows on their account. This may potentially result in consumers believing they have more money in their account than they really do, leading them to accidentally overdraft.

Additionally, there are complaints that banks attempt to re-process failed transactions multiple times after the transaction was initially denied. When a customer who has not opted-in to overdraft protection attempts to make a purchase but does not have enough money in their account, the bank may decline the transaction and assess a charge.

However, some customers say have their banks have attempted to re-process these transactions several times, without the customer’s knowledge. These additional attempts to process failed transactions are also assessed overdraft fees, even though many consumers claim they did not authorize the bank to process the transaction a second or third time. Some customers have reported not discovering the additional charges until they reviewed their bank statements.

Overdraft Fee Settlements

One result of a South State Bank overdraft fee lawsuit is a settlement. The terms of the settlement may allow bank customers hit with unfair overdraft fees to recoup some of their expenses.

For example, The Daily Research Correspondent reports that TD Bank agreed to pay $122 million to resolve allegations by the Consumer Financial Protection Bureau (CFPB) that it charged overdraft fees illegally. More than 1 million TD Bank customers will share in $97 million of the settlement, while the other funds will go to pay a civil fine.

The CFPB alleged that between 2014 and 2018, TD Bank hit consumers with overdraft fees for using debit cards without first obtaining consumers’ permission to assess the fees. The bank allegedly charged $35 per overdraft after automatically opting customers into an “optional” Debit Card Advance Program. TD Bank agreed to the settlement in August.

Further, a recent decision by the Ninth Circuit upheld a 2017 multimillion-dollar settlement over allegations that Bank of America assessed illegal overdraft fees. Legal Newsline reported that the lawsuit was sparked by Bank of America’s supposed “extended overdraft balance charge.”

Plaintiffs claimed that they were promised the $35 fee would only be charged on reoccurring withdrawals, such as mortgage payments; however, the bank allegedly charged them for one-time purchases, from a tank of gas to a cup of coffee, driving up their profit. Class Members in the Bank of America overdraft settlement reportedly included all consumers.

If you have been charged a South State Bank overdraft fee and believe that the fee is predatory or in violation of the South State Bank overdraft policy, you may be eligible to speak with an experienced attorney about your legal options. Consumers who file or join class action lawsuits may be able to collect reimbursement and additional compensation for predatory overdraft fees.

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.