Debit Card Rip-Off

Another GH Article.

Debit Cards Incur Overdraft Fees
You may assume that a debit charge will be denied if your account lacks sufficient funds. Not so. Most banks will cover your shortfall, then charge you a fee - a practice now at issue in three class-action lawsuits in California.

How Some Banks Stack The Deck
Say you make three $5 purchases in one day with your debit card. Last stop is the grocery store, where you spend $99. Unfortunately, there was only $90 in your account that day, so an overdraft fee is in your future - but presumably only one, since the three smaller purchases went through first. Here's the catch: Some banks reorder your charges so the $99 purchase would appear first. The bank then clears all four debits, in order, and you incur four overdrafts instead of one. Now instead of paying, say, $30, you're paying $120. Of the three banks being sued in California, Bank of America and Wells Fargo declined comment on this practice, while a Citibank spokesman would say only that the suit is "without merit."

(I can personally attest to Wells Fargo doing this to me numerous, numerous times - that's why I no longer bank there. Another practice that Wells Fargo did to me - bank employees told me that charges come through 24 hours a day, while deposits do not. So if you make a deposit after the cutoff time of 3:00 or whatever it is, and you make a charge on your debit card at 3:01, then you'll be charged an overdraft fee if you didn't have enough money in your account before the deposit. I have also checked my account balance online and saw where a debit went through, then later on that day, the debit is gone but others mysteriously appear. Then the charge will reappear, making my account negative and then charging me buttloads worth of overdraft charges.)

What You Can Do
Always be aware of your checking account balance. If you're close to the edge, don't use your debit card. (Kind of hard to do when your family needs to eat.)