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Most bank customers sign up for new checking accounts without fully understanding the many terms and conditions (Ts&Cs) of the account. Overdraft protection is one of the often misunderstood terms and conditions of programs.
In general, the function of an overdraft protection program is to allow a bank to cover (pay) an outstanding debit charge, credit charge, or check that is drawn against a checking account that has insufficient funds to cover the charge. There is a remaining amount. In return, the bank will charge the customer for this service. The fee is applied directly to the account balance at the time of the charge, adding to an already negative balance.
One of the most misunderstood aspects of overdraft protection programs on the part of consumers is the fact that banks will allow debit card charges to be approved and processed even if the account balance is negative! Most checking account customers wrongly believe that the bank will decline any debit purchase they attempt to make if the balance is too low to cover it. Or else! Instead, the bank will honor it and then charge an overdraft fee. This simple misunderstanding results in billions of dollars of extra income for banks in the form of overdraft fees.
Not only are banks in no hurry to dispel this misconception about how overdraft protection works — many of them actively engage in practices designed to increase the likelihood of multiple overdrafts happening in a single day. thereby increasing the number of overdraft fees they accrue. They do this by first processing the larger amount of transactions done in a day, then processing the smaller transactions. Doing so increases the chances of getting overdraft. Result: As the last few transactions are processed, each may result in an overdraft fee.
If you’ve recently noticed one or more overdrafts on your bank statement, you probably want to do everything in your power to remove it. This feeling can be especially strong if you believe the overdraft is the result of a deceptive practice on the part of the bank.
To get the overdraft item reversal request approved by your bank, try these steps:
1. Get a copy of your bank statement online or in paper form.
2. Locate the line item in question by looking at the date of the transaction that resulted in one or more overdraft charges being applied to your account. These will be expressed as a debit against your account (shown with a minus sign, as in Withdrawal).
3. View the checking account balance shown in your account on the day and time of the charge that resulted in the overdraft. Was it looking equally positive then? If so, you may be able to convince your bank that their details are unclear and a reasonable person would conclude that the account had a balance at the time.
4. Remember that it is important to be polite and friendly when you call your bank. They receive thousands of complaints every day about overdraft fees and are ready with verbal ammunition to hit back at you. Their most common trick: to make it clear that it’s you who made the mistake, not them. But, as anyone who has seen a typical bank statement knows, they are not clear.
5. If you are unable to convince the phone representative to reverse your overdraft charges, consider writing a letter to your bank’s home office to formally lodge a complaint.
Of course, all of this opposing action takes time, and for many of us, time is money. Sometimes, it may be easier to try to fight with your bank about a given fee, rather than opting to switch to a bank that does not charge overdraft fees. There are banks in the market today that will never charge you an overdraft fee – even if you overdraft your account!
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