Can a bank charge overdraft fees on a check they caused to bounce by collecting an overdraft fee?

Question

A bank where for 12 yrs my wife's disability check is direct deposited has been charging $5/day overdraft fees. It seems as though all her checks bounce because they hit the account first. She's very good with $$. If she was off by$1.83 and they tap her for $5/day until the first, it gets costly, and they make any and all future transactions NSF and then they charge more $5/day. It doesn't seem right... Any help?? Can they really do that? I'm going to insist she move her account, but what about the money already gone? This is getting to be a good bit of money!!!! Can the bank be forced to give it all back?

Answer 1

Don't listen to anyone on here. GO AND SEE YOUR BANKER. HE/SHE WILL ASSIST YOU IN ALL MATTERS CONCERNING THIS SITUATION. YOU ARE TO BE COMMENDED.

C'ya

Answer 2

Yes, the bank can do that. No, you will not be able to get the money back. Most, if not all banks, run debits (checks written from your account) before credits (deposits). So, if a check was written with the anticipation that the money would be there before it clears and it gets to the bank the same day or sooner, it will overdraft the account. Banks can can charge a daily overdraft fee untill the account is brought to a positive balance. I know this may not seem fair, but remember that banks are businesses and are there to make a profit just like any other business. The best thing to do is simply make sure not to write any checks until you are sure that the money is available. You might consider asking the bank about overdraft protection too.

Answer 3

Yes, unfortunatley they can charge those fees. They would have been noted in the paperwork when she opened the account, or any changes included in flyers that were mailed with the statements. She would have had a certain period of time to opt out of it (by closing the account basically) and after that, she is bound to those terms.

It sounds as though they are covering the checks (in other words not bouncing them back to the store/utility company/whoever she wrote it to). So, they are essentially charging her a fee for them to "loan" her the money to make the checks "good." If that is the case, the only way to clear it up is to pay off the loan with the "bank."

If they are only charging $5/day for overdraft, then she is actually getting off very cheap. Most banks will charge $35+ for the bounced check, return it to the person she wrote it to, who would then turn around and charge another hefty fee of around $25-35. So, that's about $60 per check. That is where it gets expensive.

Until she has enough money in her account to pay for the fees, they will continue to NSF all checks that she's writing. The bank will get their money back first before they honor any more checks on her account.

Answer 4

Ok, first of all if that is what customer service told you it will be ok, Debit card purchases are funny. When you give a company your card information, unless they take it out as a point of sale(POS) purchase(with your pin #), they do not receive their money in that instant. Now, a bank may show a debit card transaction as pending for a day or several days, but that does NOT mean the money has left your account. The way i like to explain it to my customers, when it is processed as a debit/check card purchase(with the visa logo), it's like a credit card. The company electronically communicates with the bank and asks 'your customer authorized this, are you going to pay this'. The bank will say 'yes'. By law once the bank approves it(even though the company does not have the money yet), the bank MUST pay the transaction. That is why many banks put a pending transaction on customers accounts. The bank 'thinks' these transactions will come out of the account and do not want to get screwed over because the money has not come out yet and you kept on spending. It is an 'authorization hold', meaning that the company is expected to take the money out of your account. So when you see a transaction pending one day and 'posted' the next, that means the company finally sent the transaction to the bank for payment and the money was taken out of your account to give to the company. Until the transaction goes from 'pending' to 'posted', you will be fine and they should not charge you any overdraft fees. I have been a loan officer and in banking for 5 years and hope this helps!

Answer 5

overdraft fees from the day before obviously come out before checks are presented today. fees from today come out after checks are presented and either paid or bounced.

yes, the same check can be bounced twice on successive days.

$5 per overdraft is dirt cheap, btw.

***
you are mismanaging the account.

all checking accounts are set up so that you'd be far better off to carry enough balance to get free checking and then that balance will cover you should a small error creep in and there'll be no overdraft fee.

what i do is simple ... when i move, i shop for the lowest balance to get free checking. credit union usually wins.

then i deposit that amount to open the account, BUT record it as if I put it into a savings account [ie NOT in my checkbook]. Then I make a regular opening deposit and keep my checkbook balance in the black.

here's my figures: 6 dollars per month checking fee is 72 dollars a year. if the minimum balance to avoid that fee is 1000, then i get 72 dollars of free service each year for havng the 1000 there, which is 7.2% -- far higher than the real rate I could get on savings. And it is tax free, too!

:-)

[note to MDBeeman -- banks run credits (deposits) before debits (checks and charges) when balancing accounts at night. And not all deposits are collected, which does make a difference.]

Answer 6

I had a couple of domino effects like that and they are unpleasant. Unfortunately I was charged $30.00 a pop and it ended up being hundreds of dollars before I caught up. You have got to make sure those deposits are in there first and set up the debits to come after. Keep an accurate checking account balance written down and sign up for on-line banking. Most banking institutions offer on-line banking and bill pay for free. I went years without ever knowing my balance and it caused a lot of unneeded stress and expense. Just one penny off and your bank has the right to charge you to cover that debt. Knowing your checks and balances will save you a ton of grief. Good Luck!

Answer 7

As long as the bank notified her that this was their policy for NSF charges there is no way to get the money back. Banks want to make it imperative that it is to their customer's benefit that they not overdraft their account.