Can a bank legally do this?

Question

Last Friday when I got paid I put in my account a payroll check from a big company. It was due to clear at midnight that same night (which is weird in the first place because most banks made that available right away). Right around midnight I made a debit card purchase. I check my online statement on Tuesday. They charged me an overdraft fee for this transaction. When I called to inquire about it I was informed because at the time of the authorization of the transaction I only had 30 cents in my account they charged me the fee. Keep in mind when the money was actually pulled from my account I had more than enough to cover the small debit card purchase.

No other bank I had dealt with in terms of a debit card does not work like this. Is it legal for them to charge me an overdraft fee at the time of authorization even though at the time when the money was pulled it was there?

I live in Ohio if that makes a difference.

I don't know if I made it clear. At the time the money was pulled from the account it was there. They charged me a fee at the time of authorization. No money was transferred from out of my account at the time they charged me the fee.

Answer 1

Technically they can, same as if a check was presented and funds weren't available. Your account went into a negative, they covered it for you and charged you for the service.

I would call them and ask them to reverse the fee since the money was there within an hour/day of the transaction.

Edit: (to reply to your additional comment)

At the time you made your purchase, lets say 11:55pm there were no funds to "pull" from so they could have declined your purchase but they (their system) allowed it to go through for you (customer courtesy), then charged you for the "service" once there were funds available in your account.

The other decision they(their system) could have made was to decline the transaction at the store(due to insufficient funds) and then you wouldn't have incurred a fee.

Answer 2

Some people got this partially correct. I would go into the bank and ask for a wavier of that charge.

If the deposit is in the account on Friday. This is called a memo post. This does not mean it available for use. You could argue with the bank they are supposed to make $100 available right away according to their own terms and the rest by the next business day.

The money should of been available for use on Saturday.

Now, if the deposit came in on Saturday. It would not be available until Tuesday.

My thinking here what happened.
The charge came in before midnight before it was hard posted. That is why you got an overdraft charge.

My bank does not change over till 5:00 a.m.

Answer 3

It is perfectly legal. They told you your deposit would not post until midnight...but you say that "around midnight" you used your card. You don't say after midnight which leads me to believe it was before or shortly before. You bank with what is called an "online" bank. That means that when transactions come in they post immediatly. The reason this is not the same for your deposits is because they actually need to get the money from the other bank.

One thing I strongly suggest you consider is direct deposit. The money would have been in your account at 12 am on the day you get your check...so it would have been in your account a full 24 hours before it actually posted to your account in this instance. Some people do not like this because they have a tendancy to overdraw their accounts and they are affraid their money will be eaten up with fees...if you are one of these people you should probably have 2 checking accounts...one that you pay your bills out of and one that your direct deposit goes into.

And for good measure go in and try to sweet talk the person at your bank that can refund fees. Tell her you did not understand that it was before midnight and your check had not posted yet...tell her it was an honest mistake and you would appriciate if you could get the fee refunded. This will not work if you are rude or impolite...or if you have a lot of NSF's on your accound.

Answer 4

This has also happened to me on several occassions. Unfortunately, it is leagal. Remember your check did not clear and would not clear until after midnight that friday. So, technically the deposit was not made yet. Just because the check is in the banks hands does not mean that it was processed. And these procedures actually happen even at 9 am the following morning with other banks. Since I have dealt with this a few times before, I chose to wait until I can confirm the money is actually posted to the account (not in pending-because many banks will say, it was pending, they were waiting for authorization from companies bank before the transaction was followed through). Even if you go online and you see the money there, be very careful! So, I decided to keep track of my check book EVERY purchase made even via debit/credit card is logged before leaving the parking lot.

Again, to our disadvantage it is not illegal.

Answer 5

If a check has not posted to your account, then the money isn't in there, even if it has been deposited. You got unlucky with where you made your purchase. Sometimes a charge will post within minutes of you making it, some won't post for days. It depends on the billing system of the place you make your purchase. Try getting direct deposit, the money posts at 12:01 am Friday morning and there's no waiting.

Answer 6

Probably if you'll look at the paperwork you signed when you opened your account, there's likely some sort of notice that deposit checks may take a certain amount of time to clear before funds are available.

Answer 7

Legal? Probably, if that is what their policy is and it is written down. Check their rules and guidelines. If it is there, then they can do it. If you don't like it, however, there is nothing stopping you from taking your business elsewhere and telling them so!

Answer 8

There is nothing wrong with the bank. Take some responsibility.