I was helping a friend with his checking account a few years ago as he had taken ill and fallen behind on managing his checkbook. While hospitalized, several automatic drafts were posted to his account, but no money was deposited, therefore his account was overdrawn.
The worst part was that the funds which were to be automatically deposited (direct deposit through 
work) were credited to the wrong account, triggering the overdrawn account. Four overdrafts later and my friend’s checking account was charged $120 in fees — $30 for each overdraft!
In this case, the bank was at fault and when I notified them of their error, his monies were quickly deposited into the correct account and the fees reversed. However, if my friend was at fault then the charges would have stayed in place and additional overdraft charges could have been assessed. It turns out that his bank allows up to five overdrafts per day but at a price of $30 per incident.
Overdraft fees are not uncommon. All banks charge them and fees range from $25 to $40, closer to the higher end for many of the large commercial banks. I’ve read related horror stories such as where a depositor made a simple accounting mistake that cost him nearly $400 in fees when all was said and done. In this person’s case they lived on a fixed income and his bank was only willing to forgive half of the fees.
Though it may seem as if some banks are eager to sock you with charges, you can avoid them by doing the following:
Sign up for overdraft checking – Have your checking account linked to your savings account, credit card, or line of credit to avoid fees. In the event that you overdraw your account, monies will be taken from another account and deposited into your checking account to cover fees. Likely, you’ll pay a small fee – usually $5 – for this coverage, but it sure beats a $35 overdraft charge!
Get direct deposit – Lots of businesses no longer issue paychecks, preferring to deposit money into workers’ checking accounts on pay day. Monies are in your account that day (no waiting to have a check clear) and you can access those funds immediately.
Seek notification – My bank notifies me when my account gets low via email. You can also set up this feature up to appear as a text message which will be delivered to your cell phone.
Fight fees – Don’t accept bank fees as is. You can always ask the bank to waive charges especially if this was a first time offense.
You don’t have to be beat up by bank fees, but you should take steps in advance to make sure that you don’t receive a nasty surprise in the form of costly and budget busting overdraft fees. In these days of tight money, a simple mistake can cost you dearly.
Adv. — Do you need some great gift ideas? Does the thought of venturing out to the mall have you stressed even feeling anxious? If so, then look for what you want to buy online! Visit nBuy Plaza to find better deals than your local strip mall. While there, print out Santa’s List and download your free Christmas Party Holiday Kit to help you plan your social events for the month of December, even beyond. Happy shopping!
Tags: bank fees, banks, Consumer Tips, direct deposit, overdraft protection
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