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Overdraft Fees: Some Banks Let You Opt Out

This article was written by in Banking. 13 comments.


Overdraft fees are nothing to sneeze at. Having not always been a model bank customer, I know how it feels like an unfair punishment to have roughly $30 taken away when my account is already negative. I’ve also worked for Bank of America, and I can see why they use a dis-incentive to drive away bad customers.

I was a pretty generous Customer Service Rep., and would refund overdraft fees to as many customers as I could. But sometimes there’d be an awkward conversation when a customer would ask, “How can I stop getting these overdraft fees in the future?”

Naturally, I’d go into my speech about keeping a balanced checkbook (or something similar) with you, and how the “available balance” you’d get from an ATM or the phone service was often a lie. Some customers persisted (as well they should) and felt like there should be a way to not be allowed to go negative. It was tricky, and unlikely, but not always impossible to get your branch manager to agree to put that kind of hold on your account.

But now, any Bank of America customer can opt-out of overdrafting. If you’re down to $2.12 in your checking account, and you go to buy a Frappucino, you’ll have your card rejected at the register.

In addition, Bank of America also decided it won’t impose an overdraft fee if your account is above -$10, unless you don’t fix it within five days. And the limit of overdraft fees you can get in one day is now four, instead of ten.

JP Morgan Chase also announced that they’ll be changing their policies:

Starting in the first quarter of 2010, the bank will make overdraft protection opt-in for all customers, post transactions to accounts as they occur, and eliminate fees when accounts are overdrawn by $5 or less. It will also reduce the maximum number of fees per day to three from six.

Bank Of America Backpedals On Overdraft Fees, Huffington Post, Sep. 22, 2009

Updated September 24, 2009 and originally published September 23, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

{ 13 comments… read them below or add one }

avatar Sasha

I am happy to see that banks are discontinuing the petty approach they had going before. I left 5th/3rd because of their overdraft policy. I am a few paychecks away from disowning my current credit union because of their overdraft policy. I HATE overdraft fees, and despite my best efforts to get all the information upfront, I always seem to be the last to know how come they are on my account. Usually if I incur them it’s because of a recurring payment that I had canceled well in advanced of the next withdrawal, but the company pushed it through anyhow. The fee pushes me into dangerously close to $0 territory, but I don’t budget for it because I canceled it. 5th/3rd got dropped due to this, AFTER they refunded my fees due to their poor customer service. My credit union is out as soon as I get enough to start my ING checking with the $25 start up bonus. I would think that I asked all that I need to know to protect myself, but apparently I don’t. :-(
I may reconsider Chase (I was with them when they were Bank1 up here), though I still have a bit of a sour taste from my last experience with them (unrelated to overdraft).

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avatar David@DINKS Finance

I like it! Makes so much more sense. It’s definitely something I would want to take part in, even though my account rarely gets to that dangerously low level.

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avatar MyJourney

ING IS THE BEST! They give you a $165 overdraft line and charge you only 7% if you dip into it. No fees, no penalties and a rate lower than 90% of the CCS out there!

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avatar Jason @ One Money Design

I’ve had some days in the past of poor cash flow managment and overdrafted. I would usually call and ask the overdraft fees be reinstated. If the customer service rep wouldn’t do it, I would call again until I found someone who would. Pretty sad on my end when I just needed to fix the root cause of my problem. And thankfully, it is fixed with better cash flow management and living on a spending plan. I’m glad to hear banks or loosening up a bit on these fees, but I still want to see people fix what is causing the overdraft. Maybe that means more awareness to spending habits or keeping an extra hidden cushion amount in the account. Can you set up an online notification service based on your account balance threshold? That would be a nice feature and might help people.

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avatar MyJourney

I know Chase does. I get a constant daily email every time my account goes below and stays below $500 (you set the limit).

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avatar Jason @ One Money Design

That’s a good feature. Thanks MyJourney.

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avatar Walt

Bank of America also decided it won’t impose an overdraft fee if your account is below -$10, unless you don’t fix it within five days.

I’m assuming you mean ABOVE -$10

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avatar Smithee ♦1,358 (Quarter)

You are so right. I’ll fix that now.

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avatar Scott

…or you should know what is going on in your account everyday and not spend money you don’t have. I’m sorry. Is that too logical?

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avatar Kristian

… or you should know what is going on in your account everyday and not spend money you don’t have. I’m sorry. Is that too logical?

Or even more logical, why not return debit cards to their original form and not allow them to go into negative territory. If I wanted a line a credit I’d get a credit card. A rep had the nerve to lecture me to the effect that I should use a check registry. Really? 2009 and I’m supposed to use a check registry? I keep my check registry right next to my vhs recorder and answering machine and all the other useless junk from 1985. You know what check registries are great for? People who write CHECKS. I use a ELECTRONIC debit card which can use the magical powers of the interweb to deny my transaction.

Here’s the really dodgy part. Debit cards originally had this function. Accidentally dip below the line? No prob, transaction denied and you can whip out cash or apologize and be on your way. Then some tart decided they could make money off all these instances and started charging $10, $15… finally $35 at most places. Fine, if you want to be like that then I’ll just OPT OUT. “Sorry we don’t have that technology” is the reply I got. Orly? It existed in 1992. What happened? Was is lost to time like the Ark of the Covenant?

It’s easy to say “Just keep track of your money loser” when you’re not near the poverty line. This practice is predatory pure and simple. Most important though is that YOU DON’T HAVE A CHOICE. Most banks don’t offer opt outs and those that do make it so difficult that most people just throw up their hands. I don’t get these overdraft fees often but just recently I was charged $140 for going $1.22 negative. That’s the equivalent of curb stomping someone for jaywalking. Thank goodness this is finally being addressed.

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avatar Clint

Customers need to be aware of how much money is in their account. But let’s remember that 45% of banks would not make a profit without these fees. Their policies attempt to maximize the amount of overdrafts through all sorts of tricky means – including reordering transactions, speeding up purchases and delaying deposits.

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avatar Lamont

@Scott yeh honestly I disagree also it’s simple enough for a transaction to be denied using a debit card. In essence debit means to debit funds available or on hands so if no funds are available why should a transaction be allowed to be processed? Like the previous person said I’d get a credit card if that’s the case. Also I’ve witnessed first hand how banks process transactions from largest to smallest purposely to allow your account to drawn down to zero and then process the remaining transactions.

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avatar Alisha

Is it only me that sees the “use a check registry” argument as a total waste of breath? Let’s put it this way, I bank at Fifth Third. 5/3 posts transactions based on largest to smallest. So let us say for arguments sake that I have 20.00$ in the bank. I make purchases in order (and therefore recorded in my register in order) for 4.00$, 8.00$, 3.00$, and say I have an automatic bill that comes out between a certain few days that I either forget, or assume is coming out at the tail end for 14.99. The bill comes out earlier than I prepared for, but still at the tail end of the charges. 5/3 charges the 14.99 first, then the 8.00, and that already puts me in the red. So I get NSF charges for 3 transactions in all. When in reality if I went by my check register, I would only have one. My point, in this day and age keeping a check register is no more protection from a possible NSF than any other method because they have some serious backdoor/screw the customer policies.

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