Overdraft Item Reversal
Most bank customers sign up for new checking accounts without having a full and complete understanding of many of the account’s terms and conditions (Ts&Cs). One of the most frequently misunderstood terms and conditions is that of overdraft protection programs.
In general, the function of an overdraft protection program is to allow the bank to cover (pay) an outstanding debit charge, credit charge, or check that is drawn on a checking account that has an insufficient balance to cover the charge. In return, the bank will charge the customer a fee for this service. The fee is applied directly to the account balance at the time of the charge, and is added to the already negative balance.
One of the most misunderstood aspects of overdraft protection programs by consumers is the fact that the bank will allow a debit card charge to be approved and processed, even if the account balance is negative! Most checking account customers mistakenly believe that the bank will simply decline any debit purchase they attempt to make if the balance is too low to cover it. Not so! Instead, the bank will pay it and then charge an overdraft fee. This simple misunderstanding results in billions of dollars of additional revenue for banks in the form of overdraft fees.
Banks are not only in no hurry to dispel this misconception about how overdraft protection works, but many of them actively engage in practices designed to increase the likelihood of multiple overdrafts occurring on the same day, thus increasing the amount of charges. per overdraft they earn. They do this by first processing the largest transactions made on a given day, and then by processing the smaller transactions. Doing it this way increases the likelihood of an overdraft occurring. The result: as the last few transactions are processed, each one can incur an overdraft fee.
If you’ve noticed one or more overdrafts on your bank statement recently, you probably want to do everything in your power to eliminate it. This feeling can be especially strong if you think the overdraft is the result of a deceptive practice on the part of the bank.
To get your bank to accept an overdraft item reversal request, try the following steps:
1. Get a copy of your bank statement, either online or on paper.
2. Find the line item in question by looking at the date of the transaction that resulted in one or more overdraft fees being charged to your account. These will be expressed as a debit against your account (shown with a minus sign, like a withdrawal).
3. Look at the checking account balance shown in your account on the day and time of the charge that resulted in an overdraft. Was it still showing as positive at that time? If so, you may be able to convince your bank that your statement is unclear and that a reasonable person would have concluded that there was a balance in the account at the time.
4. Remember that when you call your bank, it is important to be polite and friendly. They receive thousands of complaints every day about overdraft fees and are ready with verbal ammunition to respond to you. Their most common plot: make it seem obvious that you made the mistake, not them. But anyone who has seen a typical bank statement knows that they are far from clear.
5. If you can’t convince the phone representative to reverse your overdraft fee, consider writing a letter to your bank’s head office to formally file a complaint.
Of course, all of this protest work takes time, and for many of us, time is money. Sometimes, it can be easier to stop trying to fight your bank over a certain fee and switch to a bank that doesn’t charge overdraft fees. There are banks on the market today that will never charge you an overdraft fee, even if you overdraw your account!