Is it legal for banks to charge $32 for a .99 overdraft? Usury?

Question

My Bank charged me $32 for a .99 overdraft. Is this legal? I know that banks are exempt from state usury laws, but it's not fair under any circumstances. I wrote to their customer service dept. and they said it was a valid charge. On 6/9 I made an online purchase for .99, usually funds are withheld immediately and listed as pending. Three days later I had an emergency and had to withdraw all the available funds out of my account. To make a long story short, my .99 purchase made three days prior to my final withdrawal cost me $32! I believe in paying for my mistakes, but this is ridiculous. There is nothing "valid" about this charge. I was wondering if banks have fee or usury limits.

Answer 1

yes it is legal, not moral but legal.
if you think the charge was unfairly applied try writing to your bank manager and requesting they revise the charge or preferably drop the charge all together.
some banks will listen to your complaint and will in some situations refund the charge.
however the bank charges should have been clearly explained to you when you opened your account. if they were not then again you have cause for complaint to your bank manager. if you have a normally good relationship with your bank (this is your first indiscretion for example), consider threatening to move your account to another bank if the charge is not refunded to you.

Answer 2

Usury applies only to INTEREST RATES!
This is NOT an interest rate. These fees had to be mentioned in your fee disclosure brochure when you opened the account. The fees can, and will be increased annually.

If you can not keep enough money in the account to cover checks it's best to just close it.

Usually, if this is a first time overdraft the bank will credit your account.

With the fairly new banking regulations having been put into place about 3 years ago, you can no longer "float paper". Your check is presented for payment overnight.

If there is not enough $ to cover it, the check will bounce! A pending deposit is not going to help. The deposit has to be POSTED, before you write the check.

If you close it, and don't pay the nsf charges they will turn it over to a collection agency, and you won't be able to open an account with another bank.

This is serious. Close the account if you can't make it work for you now. Maybe you can later with a higher income. Don't mess up your checking and savings opportunity for later.

Answer 3

I've been in banking for four years..and I will tell you that yes it is legal. Banks have what is called "Rules and Regulations and disclosures" that they should be giving to you at the time your account is open. These books describe things such as fees for overdrafts and things like that. I know it is a large charge..the reason it is so large though is because they have to pay their employees to process not only the transaction, but the paperwork etc...and they have to pay for the cost of the purchase out of their own "funds". My best advice for you would be to get some sort of overdraft protection just in case it happens in the future..(hopefully it won't)...if your account is generally in good standing though-such as you've been there for a while and this kind of thing rarely happens-I would talk to the manager of a branch and see if they can do a courtesy fee reversal for you this one time. Good luck.

Answer 4

Banking is a service that you pay for. If you have questions about the various charges for the bank's services, you'd do well to call your banker and arrange a time to sit down and get on the same page so you both know what your expectations are and what the bank's expectations are.

If you are not satisfied with the charges that your bank has in place, you may want to shop around for a money manager who has more reasonable charges.

I'd strongly recommend that you read about and know what various financial responsibilities you can get into BEFORE signing on the dotted line. Finding out later and saying it's not fair is silly...you should have read all of that before you opened your account.

Answer 5

I have worked for many banks, and yes unfortunately it is legal, no matter how large or small is the item that cause the overdraft.
If you dont have a history of being constantly overdrawn, banks will usually give you a refund of the 32.00 as a courstesy, especially since it was only.99. As a general rule however, banks will most likely not refund the fees unless it is a bank error.
ALL banks offer overdraft protection for checking accts, either thru a line of credit or thru your savings acct. Consider setting that up.
Also, get online banking, it is free thru most banks and it allows you to see the activity on your acct 24/7. Best thing ever, that way you know how much money you have, and can avoid overdrafts.
Fee income is the number one way for banks to make their money, and they are restricted as to how much they can refund every month, they need to stick to a budget.
Hope this helps !!

Answer 6

Perfectly legal! All banks have fees they charge for overdrafts and to argue is pointless cuz it is bank policy and the bank can be fined for not following there policy which is stated when you open and sign for your account. You might try going in to the bank in person and talk to a manager and rxplain your story and maybe they will reverse it for you but it is a managers decision only not customer service they are just doing there job following the rules and can do nothing really for you. Try the manager and good luck!!!

Answer 7

Yes. Banks tell you up front what overdraft charges are. Including 1 penny overdrafts. If you have good standing with your bank, ie. no history of overdrafts, a phone call usually is all that's needed to cancel the charge. Especially if you suggest you move your account to a competitor.

Answer 8

it is LEGAL because the bankers and their lawyers and lobbiests got there FIRST to MAKE IT LEGAL ! When there is NO CREDIT extended, there should be NO CHARGE to simply look at your account balance. PAypal debit cards tied to a checking account charges NO FEES if they go to collect and the funds are not there . . .why should BANKS or credit unions ? There was NOTHING lost ! IT is not only immoral but SHOULD BE ILLEGAL because there Are people out there who make an occasional mistake in math and or when they find themselves in a position to have to continue to change using a debit card because they have to continue to work to put food on the table and gas in the car and their EMPLOYERS cannot pay them and therefore the income stream gets interrupted. Then a terrible hole starts getting dug and it only makes things worse. This is a function of the economy and not the fault of the working poor. BANKS NEED TO EXTEND CREDIT OVERDRAFT in this case! MAKES ME SICK !

Answer 9

Your bank will more than likely waive this fee if you just call them and ask them too. I am with Bank of America and they have done that for me on a $0.19 overdraft The first couple times, they'll usually let you slide. They would rather have your long-term business than your $32.

Answer 10

Yes, banks can charge whatever they want. I'll tell you something else, overdraft protection only covers the amount of the check, they can still charge the overdraft fee. Try not to bounce your checks.