| Bank overdrafts occur whenever you execute a debit, | | | | positive balance on your statement, there are often a |
| check or credit card transaction that is tied to a | | | | number of things in the background (e.g., un-cashed |
| checking account with an insufficient balance to cover | | | | checks, pending credit card transactions, etc.) that are |
| the transaction amount. When an overdraft occurs, it is | | | | about to make your balance run low - or into the red - |
| usually rejected immediately by the bank. | | | | when you are not looking. |
| However, if you are enrolled in an overdraft protection | | | | Once an overdraft has occurred, you will see a |
| program (and most people are nowadays, due to | | | | charge appear on your account. Again, this charge |
| automatic enrollment programs upon account signup), | | | | may be $20, $30, or even $35. This adds insult to |
| your bank or credit union will cover the overdraft | | | | injury, since you're already in the red and now are |
| amount by paying the merchant or individual to whom | | | | responsible for paying the bank more fees just to get |
| the charge was made. At the same time, your financial | | | | yourself back in black. |
| institution will charge you a fee for the service. These | | | | So, what is your degree of control over a bank |
| overdraft fees can add up quickly. At $25 to $35 per | | | | overdraft? Here are some possible courses of action |
| charge, just two overdrafts can add up to $50 or | | | | for you to follow: |
| more in fees in a single day. | | | | 1. Call the bank to complain. This may or may not get |
| When asked, most casual observers would say that | | | | you anywhere, but it is worth a shot, especially if you |
| the banking customer who has overdrawn their | | | | are a new customer to the bank or if this is your first |
| account should be held accountable for any fees they | | | | overdraft in a long time. Stop short of threatening to |
| have to pay. After all, the overdraft is their fault, right? | | | | close your account due to the overdraft fee (unless |
| Of course, technically this is correct, provided the | | | | you really mean it - since they may call your bluff). But, |
| person has been adequately informed of the fees. | | | | let them know you are unhappy and see if they will |
| However, if you dig a bit deeper, the reality is a bit | | | | remove the fee. |
| murkier, given these facts: | | | | 2. Write the bank's customer service department and |
| 1. Many banks admittedly practice something called | | | | request a refund of your overdraft fee if you suspect |
| transaction stacking, whereby they will process larger | | | | an error or deceptive bank practice led to the |
| transactions made in a given day before processing | | | | overdraft. |
| the smaller ones, thereby increasing the chances of | | | | 3. The most drastic course of action: leave your bank |
| overdrawing the account with more transactions and | | | | and switch your checking account to one that |
| thus more fees being incurred. In other words, these | | | | promises to never charge you an overdraft fee. For |
| banks (including many national chains) are literally | | | | more on this option, see: |
| gaming the system to try to increase their fee-based | | | | Online banking shouldn't have to be expensive, |
| income. This makes sense, given that overdraft fees | | | | especially if you are generally a responsible banking |
| are a $25 billion per year business for banks. | | | | customer who occasionally makes a few banking |
| 2. Banks' online statements are often confusing to | | | | mistakes but doesn't want to pay through the nose to |
| read and understand, such that it can require you to | | | | atone for your banking sins. Know your degree of |
| manually track and make back-of-the-envelope | | | | control over a bank overdraft and take the necessary |
| calculations to determine the actual balance of the | | | | steps to get a refund or switch to a no-overdraft-fee |
| account at any given time. Even though it shows a | | | | bank. |