Bank of America’s new overdraft policy as of 03-01-2008.

First, I should elaborate that I have not been hit with this.  I was informed of it by a supporter of House Resolution 946: The Consumer Overdraft Protection Fair Practices Act.

Apparently Bank of America is one of the first bank’s to implement a new process of charging overdraft fees to punish their customers yet again.  As of March 1, 2008 customers will no longer be charged a $35 overdraft fee when a transaction clears their account without available funds.  Now a “pending transaction” or one that has not posted to the account can automatically invoke the $35 fee if it puts the acount in the red.  So what’s this mean?  An example will explain it best:

Lets say you have $425.00 in your checking account.  You go to dinner with your significant other and spend $45 at Applebee’s or another affordable restaurant.   When the check comes you provide the waitstaff with you BOA debit card.  Through a complete accident the waiter types $450.00 into the keypad instead of $45.00 and receives an approval code. Prior to this new fee processing schedule by BOA this would be no major ordeal.  Many consumer have been told by cashiers “don’t worry that transaction won’t be settled and the hold will come off your account in 3-5 days” which it does.  And the waiter swipes the card again and enters a transaction for the correct amount $45.00 which Bank of America, by their own policy, approves even though the account is now “overdrawn”.

The next day you check your BOA account on line.  It’s negative (-$140.00).  Wait a minute.  What the ****?  You only spent $45.00.  Here’s how BOA’s systems now process transactions and fees:

Beginning Balance: $425

Accidental Pending: $450

Balance: (-$25.00)

Over the limit fee: (-35.00)

Pending: $45.00

Over the limit fee: (-35.00)

New Balance (-$140.00)

Eventually the accidental transaction of $450 will not be settled and it will drop off.  But instead of paying $45.00 for dinner you have spent $115.00 through no fault of your own (the original $45.00 plus the two $35.00 overdraft fees).  In an investigative converstation with a Bank of America Employee I was told these overdraft charges for pending transactions would not be refunded under any circumstances.

I can’t believe this is not getting more attention than it is.  This is the first time those who argue “don’t spend more than you have” and preach “personal financial responsibility” in defense of the banks have no ground to stand on.  This is stealing, plain and simple.  It is evidence that the banking industry has elevated itself above the laws and morals we claim to have founded this country on.   Now more than ever we need support for House Resolution 946 because once the other major banks conclude that BOA has punished their customers for profit, yet again, they will follow suit.

The media will not cover this topic because the major media outlets fear the loss of advertising dollars.   The banking industries crimes against consumers must be made known through viral propagation on the Internet.  Consumers must be given the option to remove their accounts from “overdraft protection” policies and the banks must be made to refund a percentage of those fees lawmakers consider excessive.

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14 years ago

Honestly, I don’t even know what my bank’s overdraft fees are, but the policy is the same. The same logic (sic) applies to ‘holds’ on my account as well. For example, if I rent a hotel room that’s $100 and my account has $175 in it but the hotel places a $200 hold on my card – whoops – instant fee.

And my bank’s ‘overdraft protection’? A line of credit. Yup, so when you DO overdraft, the bank gives you a loan to cover the fee. Aren’t they sweet?

This needs to be addressed, or I’m going to start keeping cash under my mattress.

Anna Moellman
14 years ago

What you have described here is what we, in the banking world, call “merchant error”. I’m not sure who you spoke to at BOA, but this would definitly be refunded to you. This law is simply another way that the bad people in the world are affecting how you live…it happens all the time (take airport security, for example). Let me give you another scenario: Jane Doe has $450 in his account. She goes on a spending spree at Crabtree using her debit card. After a day of shopping, an exhausted Jane realizes she has spent $449, leaving her only $1 in her account. Before she went shopping Jane paid her bills with checks. On Monday morning, the checks clear her account fine…a total of $400 out of her balance of $450…leaving her $50. The next day, all of her debits from Crabtree coming through. Because the merchant is guaranteed payment by the banks, the bank HAS to pay them, overdrawing Jane’s account by $399. Jane simply doesn’t have the money, and in the end leaves the bank holding a $399 charge off. The bottom line is, if you keep up with what you have in your account and what you are spending, this will never affect you. If a merchant keys an error, you will be refunded (perhaps requiring minimal paperwork to you bank). It’s time for folks to grow up and quit blaming all their mistakes on the banks….

14 years ago

I have become a victim to BOA new policy. I was accidently overcharged at the doctors and my account went negative because of it. I had been charged the correct amount, everything would of been fine. My problem with this policy is that my pending(incorrect) charge showed my account negative, then previous transactions(which were purchase while there was plenty of money in my account) posted after the incorrect charge was made. These older transaction all posted negative because of the one pending charge. Then when the pending charge finally posted, I got hit with another fee! In total 11 overdraft fees at $35 a piece. That is a lot of money to lose, and very hard for someone to doesn’t make a lot to come back from. Luckily my local had a few nice people and the fees are being refunded, however that takes time. I haven’t been able to spend any money for a week. Thank God I didn’t really need much(well besides gas which I had to borrow money from someone for).

The part that really bothers me, is that I feel I’m being penalizing based on 2 different methods of computing overdraft fees in order for the bank to receive the most possible. BOA either needs to go off the balance that was there at the time of purchase OR when it post, not both. If they had only used one method I would have only received one overdraft fee not 11. As soon as I get the rest of my money back and my next direct deposit goes in, I’m done with BOA. I work retail and I’m telling EVERYONE I see with a BOA card of this new policy….

14 years ago

I just had my first experience with this new Bank of america scam, HORRIBLE!!!! I realized that my account had been overdrafted by 2.50 from a transaction that had taken some time to clear. When I logged into my online banking I saw that the item for 2.50 was still pending, so I did a transfer from my checking to cover it and then some. Usually if I miss something and overdraft for some reason I move money over to my checking and then it’s a wash and I won’t get charged a fee…because the overdraft Item is still pending. Well imagine my shock when I logged in later in the day and saw an overdraft fee of 35.00!! The 2.50 that overdrafted me hadn’t even cleared my account yet, but I still had an overdraft fee! I called the friendly customer serivice reps who informed me that they stopped letting you fix your overdrafts and that I shouldn’t be upset becuase it was my own fault for not keeping a register! Very nice service. I then went into a branch location and they told me the same thing and let me know that they are just following the same procedures that every bank in america follows. I was so furious I paid the fee and closed my account. I should have closed it a long time ago becuase it really is a horrible bank with horrible customer service.