Avoid Bank Overdraft Fees by Opting Out

I recently got a letter from my bank giving me a choice to opt in or out of a plan of how they will be dealing with overdrafts. Previously, the bank used to automatically honor all the checks issued or any transaction charged whether there is money in the bank accountor not. Then, they would charge an NSF fee of about $38.00 for every transaction that occurs when the account is on the red.

Needless to say, but NSF/ overdraft fees is one of the huge money making machines for the banks. However, following the recent bank regulations, the banks (at least my bank) are having to explicitly ask the customers to choose whether they want  the bank to honor the transactions even when there is no money in the account and incur NSF charges or the bank can decline any transaction when there is less money in the account to cover up for that specific transaction.

My NSF ordeal

I learnt the hard way about updating my check book and debit card. Summer 2006, i had some few dollars in my bank account, but i was expecting a payment to go through into the bank so i knew i would have money in a few days. I never checked whether the deposit went through, i just waited one extra week and started charging my debit card for small stuff like soda, chewing gum, and lunch here and there; and after a week or so i had charged about eight to ten transactions that did not even amount to 35 dollars in total. Then i received a note from the bank which i did not care to open until after two days when I got another note. I opened the note that was sealed like a check and WOW!!  I had $357.00 on NSF fee? No! It can’t be. I drove to the bank before i could even lock my mailbox because in my mind knew they were robbing me or someone else is. At the bank customer service, they pulled my bank transactions record and to my surprise, the money that was supposed be deposited into my account was never deposited.. and the bank was also charging $7.00 every day that the account remained negative on top of the NSF fees.

So, “what can you do to help me?”  I asked the Bank Rep, “as you can clearly see from my statements this is my first time to be in the red!”  He said that he can only waive the first NSF and the daily fees, and i would have to pay the $319 plus any extra transaction that may go through before the account is brought back to the positive.

It took me over two months to recover from that NSF ordeal and i ended up paying even extra three more overdrafts fees but I learned my lesson.

Within this time I also noted that on the three subsequent NSF charges, the bank posted the larger debits first, then the smaller ones, even if the smaller ones were charged first thereby causing overdrafts of the smaller and larger debits charges. May be I was so outraged that I started looking for reasons to blame the bank but it appeared like that is what they were doing.  Of course, personal responsibility should be exercised- but i like the new regulations where the customer has opt in or out but it is not automatic as it has been.

 I never want a replay of that episode ever.

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