Real Deal: Overdraft

No matter how careful you are with your spending and your calculations, or how carefully you balance your check book, your bank statement may say those annoying words: Overdraft fee.
 
Bank customer
"They're ridiculous."
 
Not only have you spent more than you have, now the bank is charging you, often more than 30 bucks!
 
Bank customer
"I think they're horrible, way too expensive."
 
But here's the Real Deal, we found sometimes you may be charged more overdraft fees than necessary! It's completely legal, but it's racking up huge penalties for angry consumers.
 
Eric Halperin, Center for Responsible Lending
"Most consumers have no idea this is happening."
 
Look: John Bertucci's statement shows he had $1174.94 in the bank when one day he spent $200, $130, $80, and $1250. Okay, his bad, he went into the red. But instead of the bank okaying the little expenditures and rejecting the big one, which would have been one overdraft fee of $35, it reordered the debits and took out the big one first. That allowed the bank to charge him four overdraft fees, quadrupling his penalty to $140.
 
John Bertucci, bank customer
"I could have used that money and they have my money now."
 
It happened to Jackie too when a deposit didn't clear in time it cost her $259 in fees! If the bank had paid the smaller checks first, it would have cost $111 less.
 
Jackie, bank customer
"The average hardworking account holder is at the mercy of these banks and they know that and they take it to the fullest advantage."
 
We found there's no rules for how banks must process checks. We surveyed almost a dozen local banks and found more than half admitted they pay the largest checks first. The American Bankers Association told us: "It's a proprietary decision." And they said, "most customers want those big bills paid first because they're more important."
 
Plus the banks say you should know this because you sign agreements when you open a checking account. And we found they do disclose check payment procedures, one says, "we reserve the right to change the order of payment without notice to you" and another, "the bank may post items presented against the account in any order the bank chooses."

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