When you withdraw money from your bank account and if such amount exceeds the total balance of your bank account, your bank will lay down some fee to cover the cost of such transaction; such covering by your bank is known as overdraft fees. The basis of overdraft fee by your bank is to protect your transaction, where in case of such protection is absent, your account balance will become extremely low, which in turn will affect your credit rating. Poor credit ratings can affect your future prospects of obtaining a loan. Usually, such fee will range between 25 dollars to 35 dollars. One of the most important things you need to know about overdraft fees is that, overdraft fee tend to stack up one after the other; therefore, if you keep withdrawing money without clearing your previous overdraft fee, your account soon will be affected by accumulated sum of overdraft fee which would again affect your credit rating. As a matter of fact, Americans paid more than 34 billion dollars of overdraft fees by the year 2017. However, this protection measure taken by your bank can sometime be deceptive too and therefore you need to know if, can your bank charge you overdraft fees on pending transactions.
Is your bank allowed to charge overdraft fees on pending transactions?
Yes, your bank can charge you with overdraft fees on pending transactions, especially when you make online transactions and the same will not be reflected on your available balance since the transaction will not be complete. Your transaction will not be complete for various reasons like the bank’s cutoff time, where your transaction will be complete on the following working day.
Whenever your overdraft your account, a fee will be levied by your bank.
The following are the reasons why you will be charged with overdraft.
- You have opted for overdraft coverage and have agreed to pay the same for transactions that are higher than your total amount in account.
- You have opted for overdraft protection plan which links your checking account to your backup savings account of line of credit, and the same gets activated whenever there are overdraft fees on pending transactions.
- Your bank has charged you by mistake, when you have not opted for overdraft protection service. When you face such a situation, you need to immediately report the same to your bank and if there is no proper response from your bank, you will have to deal legally by approaching an attorney with such specialization.
Important Overdraft Fee Protection FAQS
- If you have not opted for overdraft coverage, you will be covered only under your default status; your bank cannot impose you fee if you transact amount more than your overall bank account and your bank can only reject your transaction request.
- Your overdraft protection law can be applied only if your transactions are not pre-authorized. This means, if you facilitate transaction via modes other than ATM withdrawals or debit card transaction, you will not be covered under your overdraft coverage scheme. It is important to note that your transactions like automatic bill payments or checks will not come under the purview of pre-authorized withdrawals but however you will be covered under your overdraft protection scheme.
Simple Ways to Avoid Overdraft Fees
- Overdraft line of credit: this is a good choice for you if you have good credit score and would like to maintain the same. Check with your bank for the availability of revolving credit line scheme option; according to this option, you will have to pay interest rate for your negative bank balance, but however you will have the option of reduction of such interest when you pay before deadline or within a span of very few days’ time
- Automatic savings transfer: in this option, you will have to ask your bank to connect your savings account with your card for which you have opted for overdraft. Once your card is subjected to overdraft fee, your bank will facilitate such payment for you through your bank account by the end of the day. However, usually such automatic transfer is allowed for you for a maximum of 6 times and the most benefiting part for you is that your bank will not charge you for such transaction.
Inappropriate or improper charge levied on your account? Or would you like to inquire if your bank has any right to charge overdraft fees on pending transactions? Your bank may or may not respond for the same but if you are in Miami or Florida, we are sure to help you with the same. If you would like to file an overdraft fees lawsuit, contact Shamis& Gentile, P.A., today for the best overdraft fees attorneys for you for this class action lawsuit.