Pet Peeves

Bank Fees

Listen, guys – I couldn’t let another day go by without addressing one of the most egregious offences in our current economy: bank fees.

It’s no secret that banks make much of their revenue by assessing outrageous overdraft charges to consumers, most of whom are the most financially pressed. In 2009, US banks made over $38.5 billion dollars in overdraft fees alone, with most institutions assessing anywhere from $25 – $35 per transaction. That means that if your $3 bottle of SmartWater at the airport puts you even $1 in the red, it could be the most expensive beverage you’ve ever had.

Some banks – such as Bank of America – have even gotten in trouble for the practices used when applying said fees. Unsurprisingly, they were caught reordering customer transactions in order to process larger checks and sums first and maximize overdrafts. Of course, they now find themselves involved in a $410 million class action lawsuit because of it. CitiBank and Wells Fargo have been involved in similar litigation, though they’re certainly not the only ones.

I’m sure we’ve all run into times when finances are tight – especially if you’re more artistically inclined and/or not working a traditional 9 to 5 – and that experience is stressful enough on its own. Adding to that the possibility that you could end up paying bigtime for a small misstep certainly doesn’t help.

I ran into a situation like this just last week, when several small automatic transactions were applied to my checking account early. By early, I mean “a few hours before my direct deposit hit”. While the four transactions totaled less than $40 in all, my bank (Capital One) applied a hefty $35 per overdraft and then another on top of it since the account didn’t have enough money in it to cover the overdraft fees. Makes a whole lot of sense, right?

I was understandably upset when I checked my account balance the morning after I got paid, only to see that I was nearly in the red again because of this. I decided to pursue this with the bank and rang the customer service number, only to be told that there was nothing they could do but that I could try to contact my home branch to see if the manager would make an exception. Did she? Of course not. After explaining the circumstances and even admitting that it was totally my fault for not keeping better track of things, my wonderfully caring local manager cut me off and told me in a disinterested tone, “Yeah, there’s nothing we can do. It’s not a bank error so you’re out of luck.”

That’s it.

The situation left a bad taste in my mouth and with an Aw, hell no! attitude, I decided to take it to the 21st Century to set things right. That’s right: I contacted Capital One on Twitter. All I did was send an @ reply message to the account which simply read, “Why are your policies so terrible? So much for putting the customer first!” Slightly dramatic, sure, but I was growing desperate. Needless to say, they began following me within five minutes and shortly after that I received a direct message from one of their customer service reps. We exchanged roughly 3 messages before I received a call from a nice woman in their executive escalations department and was informed that as a “courtesy”, they’d refund all but one of the fees this time despite it being against their usual practices.

All’s well that ends well, I suppose, but let’s get real – why should I have had to go that far for such a small mistake? Despite new regulations put in place last year by the Federal Reserve, banks are still swindling consumers of billions of dollars per year in fees just to pad the pockets of the industry. It’s not cool, and overdrafts aren’t the only way you could be losing cash – Consumerist also put together a list of other charges you could be incurring from your respective financial institution. Stop the madness, people.

Have you guys had bad experiences with banks? Let it all out in the comments section!

Image via Unheard No More!

  • Rebecca Farmer

    WHOA I hate overdraft fees. I mean, who doesn’t? But in high school, they ruled my life. I think I was grounded for my overdraft fees more often than things normal high school kids get grounded for. Now that I’m a more responsible (maybe?) college grad… it doesn’t happen as often. Wish they would reverse all those fees from high school solely on the basis they gave a debit card to a high school kid with no money management skills… but apparently that’s not a bank error either.

  • Holley Shearburn

    i bank at a credit union these days and i absolutely love it. my overdraft fees are very minimal and because there is no absurd “after 2pm” time restrictions on when your $$$ shows up in your account, life has been made a lot easier knowing that it will show up immediately upon deposit. my quality of life has seriously improved since i cut wachovia out of my life. it’s like leaving an emotionally abusive ex-boyfriend in the dust. now whenever i pass i by wachovia on the street i pat myself on the back for dumping that loser.

  • Jonna Isaac

    Oh man! Chase totally re-ordered my transactions as well. Glad to hear banks are getting in trouble for it, as it’s one of the skeeziest practices I’ve ever heard of. A while back they charged my $100+ Target purchase (which happened in the evening) before my $5 Starbucks transaction in the morning (and other small transactions early in the day), so the $100 would knock me in the red first and they could hit me with a fee for every small purchase that never actually put me in the red. $35 each! So infuriating. When in actuality the only transaction that would’ve cause me to dip below 0 was the purchase in the evening (which actually was my bad). I was also met with the same “nothing we can do” attitude when I called to find out how in the hell my transactions were conveniently re-ordered to completely screw me.

    So glad you found some relief via twitter!

  • Jessica Day

    One time, I checked my bank statement to see how much my paycheck was because it was scheduled to direct deposit that day. I found myself $200 in the negative… and that’s after the deposit. I went to my bank and spoke with the manager (I cried a little, not a manipulative way, but in a.. I’m a poor college student and I’ve just worked 2 weeks for nothing way). She actually went through and found where they had processed the bigger checks first (leaving almost 10 under $5 to bounce) and overrode all of them. In the end, I still paid $70 something in fees but I at least had over a hundred back in my account.

  • Jessica Scott

    Most of my work experience is in banks. I started at a small local bank and then moved to a large corporate bank. The difference between just working at those two institutions was like night and day. At the large bank I worked very close to a college campus where the majority of our customers were college kids just getting started and without full time work. We were told to sell them credit cards, credit lines, pretty much anything that we could and label it “overdraft protection.” I can tell you, I think I lost a bit of my soul working there. I even got written up because I reversed some fees on someones account and then refused to sell them a credit card. I didn’t see the purpose of selling them something that they couldn’t pay back. Big banks are evil. Stick to small local banks (if you can find them anymore) or credit unions. And always check a banks fee schedule (they usually have a pamphlet, either way it is required by law for them to provide you with one) BEFORE opening an account.

  • Fiona Lyons

    We’re all mutha’uckas and we’re ‘uckin with your shi’…so true though, and I thought our banks here were dodgy (well, they still are), bit this re-ordering sounds dodge as hell. I just make sure any direct debits I have coming out do so the day after I get paid, as I’m usually down to my last $10 by the time payday rolls around.

  • Katie Naugle

    UGH- I totally agree with you. I have definitely been in your situation before with Bank of America- having several $35 overdraft fees on tiny transactions that were only a couple of dollars. It seriously made me want to throw a chair through their bank window. I don’t know how people can be so greedy. It kind of makes a gal want to store all her money under the mattress Great-Depression-style. I’m sorry they were such jerkfaces to you. :(

  • Joelle Paschke

    I have worked for two different banks – one of them is a nation-wide bank, and the other is more regional. The new overdraft laws only apply to non-recurring debit card transactions and ATM withdrawals. Checks and electronic debits like recurring bill payments can still get you overdrafts! My recommendation is this: OPT OUT of overdraft protection or whatever your bank calls it. Say that you do not want your debit card to work if you do not have enough money. Your card won’t work and you won’t get an overdraft. Also, consider starting paying your bills using your debit instead of having it automatically taken out of your account. It’s going to be a lot easier to pay a small fee for paying your bills late rather than $35 for each one from your bank.

    I personally have a lot of issues with banks and quit working there because of the underhanded stuff they pull. Most tellers GET PAID to get you NOT to opt out, so they will be pushy. Stand up to them and make it CLEAR that you want to opt out.

  • Alexis Naomi Dwyer

    I am fortunate enough to have a credit union through my work and they don’t pull crap like this. I have gotten an overdraft fee once because a credit card payment cleared late and I had to transfer money from my savings to checking. All I had to do was call and within 5 minutes the fee was refunded to my account.

    I am not saying I have always been this lucky though. My first bank account was with Washington Mutual (Now known as Chase) when I was 17. I probably got more overdraft fee’s then the money actually going into the account (slight exaggeration). My mom had to go down there and take care of it and from that moment..I didn’t have another bank account for two years. Thats when I got my credit union account with my new job.

    I was then stupid enough to open up a bank of america account (the worst bank ever) to get the 50 dollars they were offering me. I used it for a couple small transactions and went to go look at my online banking when I went to deposit some money. I saw this whole re-ordering thing of transactions and of course got charged an overdraft fee. Of course I was like “oh hell no” and “im’ed” a representative on the website right there and got just a little crazy. But it’s ok because it resulted in me getting refunded. You better believe the next day I went and closed my account despite being upset of letting go of my cute Hello Kitty Card.

  • Irene Z Hutton

    I do business banking with Wells. I just recently incurred 140.00 in overdraft fees (4 x $35.00) I had more than enough money in a savings account to cover less than $500.00 in bills. After speaking with my account rep (who I never hear from) she reversed two fees and informed me that if I linked my savings to my checking it would only be a$12.50 or so fee per day for being overdrawn(I thought they were linked already). Thank you Bank Manager for looking out for your business customer(not) and NOT taking the personal time to review my account and let me know I had options. I had her link them, and now the fees will be less if I should be so remiss as to not keep a larger balance in the checking. After all, at a .33% annual yield on the savings, it’s not much different than no interest at all on the checking :(.

  • Carson Moore

    We “bank” with a credit union and it’s the best decision we’ve made in terms of financial institutions!

  • Kimmy Pocket Hope Athay

    Yes, credit unions are totally the way to go! Not only are they not-for-profit, but they’re also way friendlier and can help out much more than the old “our hands are tied,” for profit banks.

  • Mallorey Bischof

    I have Wells Fargo and have been experiencing this kind of stuff for years. Granted, I’m not always the most financially on-top-of-things person, but I’ve always thought it was stupid to charge so many overdraft fees when, like you said, the people who overdraw are usually the ones who have less money in their account much of the time, and getting them more and more in the red isn’t ever going to fix the problem and is NOT in the interest of the customer WHATSOEVER. The last time it happened to me I absolutely could not spare the 2-overdraft-fee (of course, a 2nd overdraft because I OBVIOUSLY didn’t have enough money to cover the first one) of $70, so I called and made a fuss and got it refunded, but I doubt I’ll be so lucky if it happens again. I’ve heard that credit unions are better at being sympathetic/compassionate to their customers when this happens, but this is a serious problem, especially for people who may have no way to be bailed out (I know my grandma has helped me out on occasion) and are legitimately poor, and I wish I could think of a way to take action on this…for everyone, not just me!!! Thank you for writing this!!!

  • Kilian Webster

    I have Bank of America. After having $27 removed from my savings account for the past two months, I finally went to the bank to see what’s up. It was then that I was informed that if you transfer more than 3 times from your savings to your checking, you will be charged $3 for each transfer thereafter. And I was informed of this… 3 months after I created the savings account. I’d be better off keeping my money under my mattress!

  • Claudia Copeland

    I’ve come to learn that bigger is not always better. I bank at a local bank where I live and I love it. I also work there, but I think that knowing the ins and outs of how the company works and how well customers are treated makes me want to promote my bank even more. If there is any way for you to open up an account at a local bank where you live then GO FOR IT! I like to think that everyone needs a little Southern Hospitality 😉 I’m here to spread the cheer in any way I can.

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