Predatory bank policy for account overdraft fees?

Question

My bank charges between $30-40 per transaction for overdraft fees with checking accounts. I found out today that they process account withdraws for each day in order of the highest amount first to the lowest amount last. It seems to me that such a policy can be used by the bank to squeeze extra overdraft fees from customers. For example, if I have $200 in my checking account, and mistakenly spend $225 on a debit card on one day in the following amounts, $3, $4, $5, $2, $7, $4, $201

The bank will purposely withdraw the money in the following order:

$201

7

5

4

4

3

2

This method allows the bank to charge the most possible for overdraft fees. Do all banks process withdraws in order from highest to lowest? Are they doing this so they can collect as many overdraft fees as possible.

Answer 1

Most if not ALL banks will process overdraft fees this way.  This is more becasue the most expensive items are usually more important than the least.  I.e.  it is better that they pay the 1200 mortgage check than your cable bill.

All these things are disclosed to you when you open an account.  It is in that literature that you probably did not read.  Your best bet is to just not spend more than you have but many banks offer overdraft protection to help endure you dont get burned like this.

Answer 2

It bothers me too, but my bank does exactly that as well.  And yes, they do it to get as many overdraft fees from you as they can.  My bank charges $35 for each.  It can very quickly get you in trouble.

It happened once to me (it snowballed into 7 single overdraft charges) and I make d**n sure it doesn't anymore.

Banks are banks, they want to make money.  How do they make the most money? From charging fees after fee (overdraft, over the limit, late, etc.) as they can.

Answer 3

If you kept track of your debit card spending like your supposed to that wouldn't happen. Every time you purchase anything you should write it in your check register immediately, not later. ....and keep the register balanced at all times, then you know exactly how much money you have to spend.

Answer 4

Sounds like BOA to me. No. Not all Banks do that. You may have to ask different banks for their overdraft policy b/c all of them are different. Some only approve you if you have the money so it is hard to have an overdraft fee while others like WAMU give you until the end of the day 11:59 p.m. to put money into your account to avoid overdraft fees. Others have a three dollar limit where you will not be charged an overdraft fee if your negative balance doesn't go over $3.00. Good luck. I hope this helps!

Answer 5

They are doing this so they can collect as many overdraft fees as possible, but it's still your responsibility to make sure you have the money before you spend it.  If you are responsible, then this policy will never affect you.