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Is it legal to charge $70 in overdraft fees for a 19-cent checking account error?

Wayne Faulkner
StarNews

If the error is an overdraft, yes — though a more common overdraft fee is $35 per transaction. Did you have two overdrafts?

Under the new federal overdraft rules, banks offered customers the chance to accept “overdraft protection” or to decline it.

In overdraft protection, the bank will pay the debit purchase or check, even if you don’t have the funds to cover those expenditures. But, they have the right to charge for each bounced transaction.

If you declined overdraft protection – what many consumer groups advised – “here’s what really will happen,” writes Martha C. White on WalletPop: “If you try to make a purchase with your debit card and the amount of the purchase exceeds the balance, you’ll simply be declined.”

However, the new overdraft regulations “don’t cover purchases made by check or automatic ACH bill payments, so if you dip into the red on one of those, you can still be charged a fee.”

Federal law does not limit the amount banks can charge for overdrafts, according to the U.S. Comptroller of the Currency.

For answers to frequently asked questions, go to the Comptroller’s website.

One of those FAQs:

Q: Can the bank charge an overdraft fee while there is a deposit pending?

A: Yes. Many transactions are processed overnight. These transactions may not be reflected in an available balance.

User-contributed question by:
donald cerasuolo

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One Response to “ Is it legal to charge $70 in overdraft fees for a 19-cent checking account error?”

  1. On August 21, 2010 at 9:08 am Keith wrote:

    Sounds like something BB&T would do…anyway…time to find another bank….just move your money….lesson learned.



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