Question about legality of overdrafts taken by banks?

Question

My 18 yr. old grandaughter opened a new account at a local bank.depositing $100.00. She was instructed to keep track of our withdrawals in her checkbook but was not informed about overdrafts. Because of an error in math she saw on the internet she had overdrawn a couple of dollars. She works minimum wage and went in and deposited two small pay checks and noone questioned if she understood about the overdraft. She thought with her deposit she was covered. She contiued thinking her account was OK and didn't deduct the one overdraft because she thought they excused the first one as a first time deal. When she next checked the her internet account she had about 6 overdraft charges of $33.00 plus other return charges. She needed $160.00 because of these charges to bring her account up to date. I gave her the money because they would have kept this up.How can they stteal money from your account that way especially when in months time she had $480.00 and they took out $319.00 in overdraf

I ran out of room. My question is if they don't properly explain something like this to a new young cutomer how they can justify the fact with what she makes they could keep withdrawing that money and lead her to financial ruin. It makes it also difficult to know you are in trouble if you don't have access to a computer and don't receive monthly statements. Their comment was if she had a problem she should have consulted them but she didn't know she had a problem until she got on my computer.

Answer 1

This is a problem, and a growing problem at that. But sadly the banks are really holding all the cards. Recent legislation and regulation on the banking industry has made it difficult for consumers to fight against these type of practices. Banks have it up to their own discretion on when they debit the account. Now they can do it instantly or wait... They also can charge the account out of order, so they can use the large checks before the small ones even if they were written at different times.

The only advise I would give you is this. Banks offer Overdraft protection. For young people who carry low balances, this is a near must. I wish I could give you better news, but I can't.

Talk to the bank get the overdraft protection and make sure she is in the habit of checking her accounts on-line daily.

Good Luck

Answer 2

with all due respect I would say there are errors in your thinking because when you open a checking account "everything" is explained to you, PLUS you get brochures which explain the same thing that you're supposed to take home and read. Clearly it states on the brochures about overdrafts and how much they charge if you run out of money and still use the account to write checks on. So the problem was not with the bank, the problem was that your granddaughter didn't read the material and ask questions if she didn't understand something.

$319 in overdrafts is a lot of money in that as I recall my bank charges $25 for the first overdraft and $30 for the second. So does that mean your granddaughter bounced 6 checks more than once?

The bank, like any business, provides their services and the person using them must abide by their rules. So the bank is NOT stealing from your granddaughter at all. I can see your frustration but your granddaughter needs to learn to read the contracts she signs, and needs to learn from them. Don't pay her bills but make her work them off by herself or how else will she learn this lesson. She also needs to know that next time she "should" know better and not write checks when she has no money in the bank (she would know by not writing checks she didn't put money in there ahead of time for) because if she continues she will end up with a criminal record. It's a misdemeanor if you write checks when you don't have the money to do that....and it's a felony if she writes a check for $1,000 with no money in her account, and that will mean jail time. With that kind of fear (to ruin her future) she should straighten up, but "only" if YOU understand what errors SHE made and hold her accountable.

Answer 3

You need to go back to the bank with your daughter and explain that she was told. She would not be charged for the 1st overdraft. Then the bank should refund all the money into the account. But some banks are uncooperative and will not do a thing even if it means losing a customer. If they do decide to give her money back as for the details or prove in writing. Make sure to have them remove her from chex systems or telecheck if they have done this.

Answer 4

I'm not from the US but greedy banks tend to me a universal concept. They probably can do due to the small print but you may be able to challenge it. If you or your grandaughter has been a customer for a long time, speak to the bank manager. Most banks hate to lose a valued customer.

Answer 5

in case you've exceeded your overdraft then why are you attempting to spend money that would not exist? appears like your monetary employer are on to you as you're not from now on taking area in with the help of the rules both!!! sturdy success!!!!

Answer 6

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