Legal Question in Banking Law in California

Timing of overdraft fees

I have noticed that my bank will hold atm card/visa check card purchases from being posted for a period of time that keeps getting longer it seems so they can get the most overdraft fees. It is very apparent that this is happening. They used to take 2-3 days to post the amounts and now it is 4 or more. It appears that they wait to see if there are larger amounts that can be posted first which will cause more overdraft fees to accumulate. For example, I used my debit card for 5 different transactions. I know the bank will allow an overdraft amount up to -$500.00. My rent check was for $800. It was obvious that they didn't post the 5 other transactions for days which took place 2 and 3 days before the rent debit. Since they were held the rent debit and the other 5 transactions posted all at once on the same day with the largest check posting first(rent)causing the negative balance and they charged me 5 overdraft charges. The 5 transactions should have posted first and I would have had to pay 1 fee of $34 instead of 5! Is this legal?? I am a single mom so I do use the overdraft allowed to get me through since the bank allows it. I plan the timing of it.

Thank you


Asked on 5/22/06, 9:28 pm

2 Answers from Attorneys
Carl Starrett Law Offices of Carl H. Starrett II

Re: Timing of overdraft fees

Your bank doesn't have to allow the transactions at all. The bank could very easily deny the transaction because you don't have the funds in your account at the time of the payment/purchase. Would you rather the bounced your rent check and/or reject debit? It sounds to mey like $34 is a small price to pay for spending money when you don't have it.

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Answered on 5/22/06, 9:47 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Timing of overdraft fees

The banks are better at gaming the system than you are. Not only that, the Office of the Comptroller of the Currency, the federal agency that is supposed to regulate banks, is such a lapdog of the banks they are supposed to regulate that they have -approved- the exact sleazy practice you complain of. Drill down into occ.gov and you can find the ruling (involving Wells Fargo Bank). Maybe someday a Democratic President will appoint someone to head OCC who is on the side of consumers, not big banks.

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Answered on 5/22/06, 10:54 pm


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