Unreasonable bank charges

[Mister Chapman]

A self-employed American lady needs your help.

She is in New York briefly, and was meant to return this weekend to her home town in the Midwest. She cannot do this because she accidentally dipped slightly over her zero limit into an unrequested/unapproved overdraft. Charges have been applied for every purchase she made after this occured, even though they were all very small transactions.

She has gone less than $150 into the red, and the bank has applied over $600 in charges. My first thought was to refer her to a site called MoneySavingExpert, but this site is concerned with UK affairs only (and the British banking system is an entirely separate issue since a recent big court action). She has of course asked her bank to stop this, but they are entirely unsympathetic and have just told her the standard "cut up your cards" speech. They refuse to refund the charges. As you can see, she is not a compulsive shopper needing to curb her crazy spending habit and the bank's decision seems completely disproportionate, especially considering the recent large payments into her account.

Can anybody recommend a course of action for her, please? Thank you in advance for any advice you can provide.

[Joan.of.the.Arch]

Is the question, how can she get home without money?

[Mister Chapman]

Ah no, sorry, I should have been more specific!

Oddly enough, she had to get back for a business meeting with the client she's working for now. The project is broken into stages, and given that she's had no paid work for a little while, she is currently living from check to check. Thankfully they are generally very flexible and her absence at the meeting probably won't affect payment for the next stage of the project. However, it means she will have to wait for that money to come in before she can go anywhere, and when it does most of it will be swallowed up in these charges which will continue the problem. Naturally, she would prefer to make it to the meeting in order to avoid straining a good relationship with a great client.

She drove to NY and will return by road, so she needs gas money in order to do that. In the meantime, she is stuck in NY relying on the kindness of people she knows there, and therefore does not want to push it by asking to borrow large sums from people on top of this.

It seems to me that it is not in the bank's interest to insist on payment of these charges, since once they are settled she will want to move to a different bank. In her most recent employment she was paid a salary of almost £100k, and after a brief period of unemployment due to the downturn she is back on her feet and well paid now as a freelancer. It just seems mad to apply $600 in charges on a $150 mistake - is this not unusual?

[Broken Arrow]

Soooo... she runs her credit card to the limit, does not track her spending, and has no cushion or emergency fund to fall back on? Well, she's in a bind, and I don't want to sound like an unsympathetic, self-righteous bastard....

When does she need to return? Does she have any more income coming soon? Any friends or family she can ask for a quick loan, or at least a bus ticket?

As for the $150, how many transactions are on there? If it's one and something like rent, then that's understandable. If it's a dozen trips to Starbucks, then not so much....

[Joan.of.the.Arch]

I don't think it is unusual for a bank to charge an overdraft fee for each and every incident of overdrawing. Seems to me I have read it usually costs about $30 per incident. Thus $600 in fees might represent having overdrawn 20 times. In addition to the fees she will, of course, have to return the money taken.

There always exists the option to negotiate with the bank, but the bank is not obliged to change their terms after the fact. And I doubt if the bank looks upon her as a customer that they really must make an effort to accommodate, as she took their money possibly 20 times.

[boosami]

She needs to write a formal letter to the bank explaining the situation, pointing out years of good standing accounts, and how happy she was with the bank up until this incident. Ask nicely for the fees to be forgiven, and express distaste with the way they treated her as a good longstanding bank member. Ultimately, say she is very unhappy with the service of late, and will be moving her accounts to a competitor with a better track record for customer service if she is not given some leeway. The letter should not be threatening in any way, just informative of her feelings and actions she will take if this is not resolved.

Wait for the response. They should apologize and waive some or all of the fees. If not, she has no choice but to pay them. If she refuses to pay, they will put collections on her report and black list her from getting checking accounts in the future.

[disneysteve]

Soooo... she runs her credit card to the limit, does not track her spending, and has no cushion or emergency fund to fall back on? Well, she's in a bind, and I don't want to sound like an unsympathetic, self-righteous bastard...

I don't think it is unusual for a bank to charge an overdraft fee for each and every incident of overdrawing. Seems to me I have read it usually costs about $30 per incident. Thus $600 in fees might represent having overdrawn 20 times. In addition to the fees she will, of course, have to return the money taken.

There always exists the option to negotiate with the bank, but the bank is not obliged to change their terms after the fact. And I doubt if the bank looks upon her as a customer that they really must make an effort to accommodate, as she took their money possibly 20 times.

I totally agree. This isn't the bank's fault. It is the customer's fault. Who told her to go and overdraw her account?

The alternative could have been that the bank would have not allowed the charges to go through in the first place and she would have been stuck in NY unable to pay for anything. This way, she was able to make the charges and not be stranded. There is a price to pay for that service and it is a pretty steep price - I'll agree with that.

Let it be a lesson to her to track her spending better and never again spend more than she has.

[Mister Chapman]

Soooo... she runs her credit card to the limit, does not track her spending, and has no cushion or emergency fund to fall back on? Well, she's in a bind, and I don't want to sound like an unsympathetic, self-righteous bastard....

When does she need to return? Does she have any more income coming soon? Any friends or family she can ask for a quick loan, or at least a bus ticket?

As for the $150, how many transactions are on there? If it's one and something like rent, then that's understandable. If it's a dozen trips to Starbucks, then not so much....

Fair play, I can see why you'd think that but it's really not the situation at all. This isn't a credit card abuse thing, it's the normal bank account. This is all in one day: one thing pushed her a few dollars past zero, which she didn't know about, and within hours she had made a number of payments for things like groceries. Then when she checks her account later in the day, she discovers $600 in penalties and a frozen account. She's in the process of moving to NY, so it's a temporary situation where she's finishing work for one client back home while setting up in the new city to find new clients and a new apartment there.

Whether she can get back or not isn't the issue - I'm just trying to find out if anybody knows another strategy for getting the charges adjusted, because it sounded extreme to me. Of course the bank can do what it likes, but I've managed to have large amounts of fines wiped on my bank account in similar circumstances just by talking to them and so far this hasn't worked for her. If you know any methods, it'd be great to hear about them.

[Mister Chapman]

She needs to write a formal letter to the bank explaining the situation, pointing out years of good standing accounts, and how happy she was with the bank up until this incident. Ask nicely for the fees to be forgiven, and express distaste with the way they treated her as a good longstanding bank member. Ultimately, say she is very unhappy with the service of late, and will be moving her accounts to a competitor with a better track record for customer service if she is not given some leeway. The letter should not be threatening in any way, just informative of her feelings and actions she will take if this is not resolved.

Wait for the response. They should apologize and waive some or all of the fees. If not, she has no choice but to pay them. If she refuses to pay, they will put collections on her report and black list her from getting checking accounts in the future.

Thank you Boosami.

[boosami]

Thank you Boosami.

Good luck to her! Let us know how it works out.

[woodie96]

It wouldn't surprise me if the bank isn't very willing to negotiate with her. The banking industry is under a lot of scrutiny of late and congress is looking into ways to protect the consumer more. With more consumer protections, the banks will make less money in their old ways of doing things. I'm sure they will come up with another way around the government red tape to make just as much money, but I don't see them giving in too much right now.

[arthurb999]

give her the money to get home...

[disneysteve]

I think it partly depends on her track record with the bank. How long has she been a customer? How much money does she keep on deposit with them? Has she ever overdrawn her account before? If she has been with them for a long time and always been a good customer, they will probably be more willing to excuse a one time screw up. If she is relatively new to the bank, has ever had a problem before or only keeps a small amount in her account, they may not budge. She agreed to the fees when she opened her account so they are within their right to enforce those policies.

[JourneyCC]

Groveling might get the bank to reverse some of the overdraft fees, but the real issue and lesson, is to SAVE for situations just like this.