Suppose you are shopping around, and your bank account does not have sufficient funds to cater for all your expenses. In that case, you may feel relieved when your financial institution/bank covers the costs of your remaining expenses as an overdraft. However, in exchange for this service, the bank will charge you a fee, also known as overdraft/NSF fees, even if your account balance is $0.
It is not automatic that you will receive this kind of service because it has to be an agreement between you and your bank. However, some banks may still charge you overdraft fees without your consent, even if you're not under an overdraft protection program. When that happens, we invite you to reach Consumer Alert Now for legal counsel you need for an overdraft class-action lawsuit against the bank to get your hard-earned money bank in your account.
What You Need to Know About Banking Overdraft/NSF Fees
Before a bank or a financial institution begins charging you overdraft fees, you need to opt-in for an overdraft protection program that applies to ATM transactions and a one-time debit. Overdraft protection is a banking program that allows you to pay for emergency expenses when you run short of money in your bank account.
For instance, if you want to pay bills amounting to $100 with your ATM and your bank account balance is $95, the bank will cover the extra expenses on your behalf if there is an existing overdraft protection agreement. However, when the bank pays for your additional costs when your bank account balance is $0, you will have to pay an overdraft service fee amounting up to $35.
If you didn't opt-in for an overdraft protection program, when you make a transaction without sufficient funds in your bank account, the transaction will decline, and you will not incur any overdraft fee. However, just because you didn't opt for overdraft protection doesn't mean you cannot incur overdraft fees. If you have pre-approved automatic payments for particular bills like rent, the bank will still make the payment even if your bank is below $0 and charge you an overdraft fee.
Similarly, even if you are not under any overdraft protection program, your bank may still charge you Non-Sufficient Funds (NSF) fee of the same amount as an overdraft fee for having a $0 balance in your account. Typically, you may have to pay the NSF fee when your debit card transaction declines even if you don’t make a transaction.
Although some consumers opting for an overdraft protection program might help, it is not advisable to make your account negative f you've other options of seeking financial assistance.
Banks also aim to make the most profit from their customers, even if it means charging deceitful banking overdraft and NSF fees whenever you have insufficient funds in your account. However, there is a possibility of recovering this money through a class action lawsuit because you aren't the only person facing financial difficulties because of these deceitful bank tactics of taking your hard-earned money.
How Overdraft Fee Arises
Below are overdraft fee practices that banks and other financial institutions use to charge you unnecessary and unwanted overdraft fees:
Non-Recurring Transactions
Some banks authorize overdraft fees for non-recurring debit card transactions, leading to double charges for similar transactions, which is a bad practice that affects a customers' financial stability.
Early Fee Extraction
Some class-action lawsuit accuses banks of wrongfully imposing overdraft fees instead of authorizing transactions at the register. Therefore, every time you settle a transaction, you put yourself at risk of accessing unnecessary overdraft fees.
Irregular Deposits
Under federal laws, banks and other financial institutions should make your money available in your account within a particular period after depositing. However, some banks tend to delay your money after depositing until you exceed your withdrawal limit so that they can charge an overdraft fee.
Unauthorized Overdraft Protection
It is not uncommon for some banks and financial institutions to charge overdraft fees without account holders' consent. Suppose you were making a payment assuming your transaction will decline because you do not have sufficient balance in your account, and the bank adds you an overdraft. In that case, it is only right to seek a refund of your money for the unnecessary overdraft fee you didn't intend to incur through an overdraft class action lawsuit.
If your bank charges you a deceitful overdraft fee and you don't remember opting for overdraft protection, you should file an overdraft fee class-action lawsuit against them to receive your money back.
What Banking Overdraft Class Action Lawsuit Entail
If you have experienced the above deceitful trade practices by banks, you can join a class or start a class-action lawsuit against the bank to seek actual and compensatory damages for the overdraft/NSF fee you didn't choose. An overdraft class action lawsuit is a type of suit where a group of people with overdraft/NSF fee complaints against a common bank/financial institution come together and file suit against the defendant.
Suppose you intend to file a class-action lawsuit. In that case, you should find an attorney with significant experience in representing classes of plaintiffs with overdraft fee complaints against banks and other financial institutions. Before a lawsuit becomes an overdraft class action lawsuit, there are legal procedures that you ought to follow, for example:
Seek Class Certification
Before filing an overdraft class action lawsuit, you must obtain a class certification from the court. The judge will certify the overdraft class action lawsuit if he/she finds that:
- It would be impractical for you to file the lawsuit individually
- Members in your proposed class share the same overdraft /NSF fee complaints
- The class representatives have a similar overdraft/NSF fee claims and defenses as other members of the class
- Your lawyer will represent the who class with overdraft/NSF fee complaints fairly
Suppose the court certifies your overdraft class action lawsuit. In that case, you and your attorney will be responsible for notifying other class members about the lawsuit via general media, like radios and televisions. The class members with overdraft/NSF fee complaints who will receive the notification will have an option to decide whether to join the class "opting in" or not "opt-out."
If they decide to join the overdraft class-action lawsuit, an active member of the class who wilfully chose to opt-in the class will be bound by the lawsuit's outcome. Class action lawsuits may require more extensive research and evidence than an individual lawsuit. At Consumer Alert Now, we understand how class action lawsuits work and will strive to ensure every class member receives his/her money back and other damages resulting from this deceitful bank conduct.
Grounds Judge Will Consider When Making an Overdraft Class Action Lawsuit Judgment
On behalf of the representative plaintiff and every member of the class, the judge will consider the following grounds when making an overdraft class-action lawsuit judgment:
Breach of Contract
The court will consider the defendant to have breached his/her contract if your account documents' express terms do not indicate you are under an overdraft protection program. No contract authorizes these financial institutions and banks to charge an overdraft fee for recurring transactions or more than one NSF fee. Those kinds of practices breach the contract with the plaintiff and other members of the class.
Breach of the Covenant of Fair Dealings and Good Faith
Banks and other financial institutions breach the covenant of good faith and fair dealings when they charge you an overdraft fee without your consent. For instance, if you aren't under an overdraft protection policy and you try to make a transaction when you have insufficient funds in your account, your ATM should decline, and you shouldn't incur an overdraft fee. However, some banks and credit unions may charge an overdraft fee without your consent, which is wrong and unlawful.
Unjust Enrichment
Even though banks are businesses like any other, they have no right to unjust enrichment. The judge will consider this ground as an alternative to the bank's breach of contract and covenant of good faith and fair dealings if you and other class members have the same complaints about unnecessary overdraft fees.
According to your transaction circumstances, if it would be unjust for the defendant to accept and retain the said overdraft fee benefits, you and every member of the class can receive a refund of your money and other damages arising from the charge.
Unfair and Deceptive Trade Practices
Every state in America has an unfair and deceptive trade act that protects consumers from deceptive acts. Banks violate consumer protection law when they charge you unnecessary overdraft and NSF fees even though your account balance is $0.
Suppose you win a banking overdraft class-action lawsuit. In that case, the judge will develop a distribution plan of the amount you have won to all other class members who had similar overdraft/NSF fee complaints minus the litigation and the attorney fee. Every member will receive a certain percentage of the money the class representative will win on the overdraft lawsuit. The amount of money each class member will receive may depend on the amount of his/her loss and circumstances of his/her case.
Steps You Can Take to Reduce or Eliminate Overdraft/NSF fees
When you are suffering unnecessary charges for an overdrawn account, there are things you can do to rectify this situation and prevent further excessive charges that pull you down financially. Here are steps you can take to manage your finances and avoid paying excessive unwanted overdraft/NSF fees:
Know Your Bank's Overdraft Fees
If you consider opting for overdraft protection, you should beware and understand your bank's overdraft fee before opting for the services. Although the standard overdraft fee is $35 for most banks and financial institutions, some have different overdraft policies. For instance, some banks charge an overdraft fee for each day your account stays below $0 while others charge this fee for each overdraft service after every transaction.
Overdraft fee policies vary across various banks and financial institutions. Ensure you contact your bank or financial institution to know the overdraft fees that apply for each transaction when you have insufficient funds in your account.
Track Your Balance
Make it a habit to track your account balance to avoid over shopping when there isn't sufficient money in your bank account because you will incur an NSF fee if your account becomes overdrawn. If you are aware of the amount of money you've in your bank account at a particular time, you will shop carefully, bearing in mind your account balance.
Do anything you can to avoid the risk of going overdraft. For that purpose, you should consider setting alerts to let you know when your account balance is low to avoid going into overdraft when shopping or making automatic payments like rent. Track your account balance after writing a check to note the amount of money you will be deducted from your account to avoid making recurring transactions when you write another cheque.
Stop Using the Overdrawn Account
If you have an overdrawn account that is causing you unnecessary overdraft fees whenever you make a transaction, you should stop using the account for some time until it is back in the black. Overdraft fees add up very quickly that you might notice you are losing a lot of your money to the bank. When you calculate the amount of money you pay as overdraft fees, you might be in awe to find that banks take almost $120 from your hard-earned money yearly.
Not using your account means you stop any unnecessary expenses, including automatic bill payments for rent and other utilities that you pay directly from your account. In the meantime, the bank will use the next deposits into the account to settle the overdraft and the service fees to bring your account balance back to $0.
Don't opt In for an Overdraft Protection
Although overdraft protection might help some consumers, it is not always a must to opt-in this option because it is a strategy banks and financial institutions use to earn more profit from the overdraft/NSF fees that you pay. To some consumers, opting for overdraft protection can even lead to bankruptcy because it makes it hard for you to manage your finances, knowing you can make purchases and bill payment with insufficient funds in your account.
If you want to avoid paying unnecessary overdraft fees, you should not opt-in for overdraft protection. If you are currently opted in on this bank service, you can opt-out any time you wish and keep track of your account balance to know when your account balance is insufficient to make certain payments.
If you don't opt-in for overdraft protection, your ATM or debit card will decline whenever you make purchases or payments exceeding your account balance. However, the good thing is that you will not incur any unnecessary overdraft fees.
Consider Linking Your Checking Account to a Savings Account
When you link your checking account to a savings account, whenever you make purchases or automatic bill payments with insufficient funds in your checking account, funds from your savings account will cover that money difference. You will receive a fee for this transfer service, but it will be lower than an overdraft fee.
Consider Shopping Around for a Different Account
Every bank offers different services and fee rates for particular accounts. Ensure you inquire from your bank or financial institution about their account fees and compare their fee rates with other banks before settling for a particular account. Since you know your spending habits well and the fees you are likely to face, you will know which type of account and bank suit your lifestyle considering factors like overdraft/NSF fees and the account's maintenance charges.
When comparing financial institutions/banks and their services, you should also consider other factors such as:
- Location of the bank
- The reputation of their customer service
- Available products and services
- Hours of operation
- Access to public transportation
Altogether the above tips will help you find a reliable financial institution/bank which will not exploit you in their fees and account maintenance needs.
Inquire from Your Bank if You're Eligible for a Linked Credit to Cover Overdrafts
Your linked credit will cover the amount difference when making payment or transactions exceeding your account balance. These services are not free because the bank will charge some fee when you tap your linked credit and some interest for the amount you decide to borrow. However, it is cheaper than overdraft/NSF fees, especially when you want to cover a temporary money shortfall when paying bills.
Your lifestyle and spending habits should help you make the right decision whether you need overdraft protection or not. Research shows those bank account holders who opt for overdraft protection end up paying more bank fees than those who don't opt for this service. If you have trouble managing your expenses and don't have many essential bills to pay, it would be wise if you don't opt for overdraft protection.
These bank fees in terms of overdraft or NSF fee may seem little, but if you keep experiencing these fees over time, they can affect your ability to track your expenses and grow your savings account. Using the above tips, whenever possible, can help you reduce or eliminate unnecessary overdraft/NSF fees.
Other Bank Fees That Account Holders Find Unnecessary
Apart from Overdraft or NSF fees, it is not uncommon to hear bank account holders with the following complaints:
Monthly Maintenance Fee
Many people don't find the need for monthly maintenance fees, also known as monthly service fees, that most banks charge to have an account. This monthly maintenance fee can range from $5 to $20 depending on the services your sign up for and the bank's location. If your account is an interest-bearing account, these monthly maintenance fees will give you a hard time keeping your account balance afloat because they take all your interest.
You can avoid this monthly maintenance fee by using free accounts that do not come with that kind of fee. Most banks provide online banking options that require minimum maintenance requirements and fees.
ATM Fees
It seems senseless to pay an ATM fee to withdraw your own money at another bank's ATM. Most banks charge a fee ranging from $2 to $3 every transaction you make from another bank's ATM. Yearly these charges can amount up to $100 with regular use of your ATM card at another bank's ATM, which is a lot of money to you but a profit to the bank.
To avoid unnecessary ATM fees whenever you make a foreign ATM transaction, you should use an ATM affiliated or owned by your bank or credit union.
Early Account Closure Fees
Most banks will hit you with a $25 to $50 fee when you decide to close your account shortly after opening it, which makes no sense to several customers. If you just opened an account and you have second thoughts about it, you should wait at least six months if you want to close the account.
The Bottom Line
Banks are businesses like any other and will try to charge account holders unnecessary fees like overdraft and NSF fees whenever possible. Knowing how banks' tactics of taking your hard-earned money can help you keep your account afloat by avoiding these unnecessary charges whenever you can, for instance, by not opting for overdraft protection.
However, suppose you choose to opt for an overdraft protection policy because you like the peace of mind of knowing you can make purchases anytime. Then, after a while, you notice that your bank is charging you an unnecessary overdraft fee. In that case, you can file an overdraft class action lawsuit against them.
To file an overdraft class action lawsuit, you need legal counsel by a professional familiar with this type of lawsuit because it is different from individual lawsuits in many ways.
Find a Baking Overdraft Fee Attorney Near Me
If you receive an improper overdraft/NSF fee from your bank that you didn't expect or opt to, we invite you to contact Consumer Alert Now at 800-511-0747 wherever you are. Our professionals will review your case situation and circumstances to know if you are eligible for a class action overdraft or NSF fee lawsuit.
