I recently overdrafted my bank account at First Market Bank, a local bank, after my husband erroniously paid our mortgage from my account instead of his. I called the bank before 9:00 to tell them what I had done and immediately took a check in for $1,650 to cover the mortgage check. The bank was very understanding, which I took to mean that all was okay. $300 in overdraft fees later I know that they are not!
My issue is with HOW the banks decide which checks to pay. They pay the largest items first - in my case, that was the $1,650 mortgage check. In my case that payment overdrew me by $1,200. Then they paid 11 checks and returned 7. All of the checks that were returned or paid were small checks/POS charges (for amounts such as $2.00, $4.61, $5.00, $6.00, etc..). I now am dealing with hundreds of dollars in overdraft fees PLUS I will have all of the fees from the companies/persons who had checks returned to them (at $30 to $40 a pop that is another $200-$300!).
Had the bank paid the smaller items, my charges would be ONE overdraft fee from my bank ($32) and no return fee from the mortgage company, because they automatically run it through a 2nd time before charging a fee!
The bank says they altruistically do this so that I do not have my big items (mortgages, car payments..) returned. That is bologna! They do it this way so they can rack up more overdraft fees from their depositers! Banks earned is excess of $18 billion in overdraft fees in 2007! It is their LARGEST source of fee income. They love it when a consumer overdraws their account.
From what I understand, most banks have the same practice. However, it does not make it right. I am 100% confident that this is a preditory practice and would jump right on board if there was a class action suit against the banks. Does anyone know of any class action suits going on right now?