Yesterday, Bank of America and J.P. Morgan Chase Bank announced they were changing their policies to allow customers to opt out of overdraft protection. Wells Fargo decided to follow in their footsteps late yesterday, announcing a number of changes at this bank. The following changes also apply to Wachovia, the bank that was acquired by Wells Fargo several months ago.
Wells Fargo is eliminating overdraft fees if the account is overdrawn by less than $5 and are limiting overdrafts to only four per day. Customers will be allowed to opt out of overdraft protection, so they don’t incur fees but transactions that would bring their accounts below zero will be declined.
All of these changes are improvements, although I see no reason for a bank to charge more than one fee per day. Regardless of what a bank charges, customers have the responsibility to monitor their own accounts. Accidents and emergencies happen, but in the end we should all be aware of what we have in the bank. The best defense against excessive bank fees is to pay attention and give the banks no reason to charge them. Here are some tips for avoiding overdraft fees.
Wells Fargo Announces Changes to Overdraft Practices, September 23, 2009
While working at Bank of America, I learned a magic phrase that I hadn’t heard before: “verify funds.”
When someone writes you a check (I know, it’s 2009, but even I use them sometimes for plumbers or whatnot), you may feel uncomfortable about whether the check author has enough money to cover it. If you’ve ever deposited a “funny” check, particularly for a large amount, you know how painful it can be to have the money credited and then later taken back out. Fortunately, sometimes you can find out in advance if the check is good.
In general, you call the bank that houses the check author’s account, provide them the check information and they’ll tell you either yes or no. Of course, even if they say yes, that information is only foolproof for about the next 3 seconds, since any number of things could happen before you deposit or cash the check, but it’s better than not knowing.
Ironically, it’s more useful when they tell you, “No, funds aren’t currently available to cover that check,” because now you have options.
- You can keep trying every day until funds are available
- You can contact the check author and work out a different method of payment
- You can decide never to do business with that person again
I did a little research for us all and called the top 6 national banks (some of them several times) and asked whether they would verify funds for a third party (the recipient of the check). Here are the results:
| Name of Bank |
Over the phone? |
In person? |
| Bank of America |
No |
Yes |
| Chase |
Yes |
Yes |
| Wells Fargo |
Yes |
Yes |
| Citibank |
No |
Yes |
| PNC Bank |
Yes (for a $5 fee)
1-900-988-4762 |
No (but every other bank said Yes, so…) |
| U.S. Bank |
Yes |
Yes |
If you’ve had an experience lately that doesn’t match the table, please leave a comment and I can revisit my findings.
This would-be acquisition is turning into a mess. First Citi agreed to buy Wachovia’s deposits with the help of the FDIC. Wachovia accepted this deal under duress, apparently. The FDIC warned Wachovia that if they did not agree to the deal, the government would seize Wachovia’s deposits. That left Wachovia little choice but to accept.
Not much later, Wells Fargo stepped in with a better offer for Wachovia. This offer called for an acquisition of the entire operations of Wachovia, not just deposits, without the help of the government, for $15.1 billion in stock.
On Saturday, the FDIC succeeded in having the New York State Supreme Court block the deal between Wells Fargo and Wachovia, but on Sunday night, the ruling was overturned on appeal. Citi will appeal this decision.
It seems that the Wells Fargo deal is better for Wachovia, Wachovia’s shareholders, and the public. Wells Fargo will keep Wachovia intact and the FDIC will not be required to use taxpayer money to cover any losses. I don’t see any reason that anyone would favor the Citi deal.
Although Wachovia was recently saved by Citi and the FDIC, Wells Fargo stepped into the picture with a better offer. In this deal, Wells Fargo would take on all of Wachovia, including deposits, brokerage, and investment management, for $15 billion. Earlier this week, Citi offered $2.2 for Wachovia’s banking operations only.
If the Wells Fargo deal goes through, and Citi will do everything in its power to attempt to stop that from happening, shareholders of Wachovia would receive about one-fifth a share in Wells Fargo for every share in Wachovia.
While Citi’s offer relied on the FDIC for financial assistance, Wells Fargo can go through with the transaction without help from the government. The FDIC, however, is in favor of the Citi’s deal.
The banking landscape continues to change.
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