Sunday, October 5, 2008

$omething to keep an eye on

If you have overdraft protection on your checking account which is provided by a credit card, please be sure to check your credit card statements to make sure that overdraft protection hasn't been invoked and charged to your credit card when your checking account has not, in fact, been in an overdraft situation.

This has happened to us twice recently-a $150 charge has shown up on our credit card statement as a cash advance with the description "Overdraft Protection" even though our checking account was never even anywhere near being overdrawn.  We eventually got them fixed, but it was a pain both times.  You have to get the credit-card-division people on the phone with the bank-division people, otherwise they just run you in circles telling you that it's a problem on the other side of the house.  

I'm going to assume that this is an innocent mistake, but innocent or not, it's a good way for a bank to quietly build up some cash (well, good might not be exactly the right word, but you know what I mean).  This is a large bank I'm talking about here, a bank that claims to have "added more than two million net new retail checking accounts for the second year in a row" in 2007.  You might be thinking, "What's $150 to a bank this size?"  Well, not much all by itself, but for the sake of argument, let's assume that they had no existing checking accounts prior to 2006 (even though the bank has been around in some form or another for over a century, under its current moniker since about 1929, and operates in over 20 countries world-wide) and that a mere 10% of those checking accounts have overdraft protection via a credit account.  That's 400,000 checking accounts, and if each one of those accounts was accidentally charged a one-time fee of $150 for overdraft protection, that's $60,000,000 right there.  $120,000,000 if they all got charged twice like we did.  

Now granted, a lot of people will catch an error like that and work to get it resolved, but a lot of people out there never even look at their statements, don't keep good enough records to know whether or not this is a legitimate charge, or are too busy worrying about other things to call up the credit card company and fight over $150.  Let's face it, for some people $150 isn't worth fighting over.  So, how many of these $150 charges go unnoticed?  I have no idea.  Again, let's be conservative and say 5%.  That brings the total dollar amount that the bank gets to keep down to a mere $3,000,000.  Ok, so that's still chump change to a bank this size, but remember we only counted 2 years' worth of new customers.  Let's expand that now to include all existing customers.  I don't know what that number is, but I guarantee it's a lot more than $3,000,000.  That's a lot of free money that the bank didn't have a right to and that should be in their customers' pockets.   

Again, I'm not saying that this was intentional on the bank's part, I'm just saying that little things add up, and this has the potential to be a huge benefit for an already huge corporation at the expense of its customers.  With all the craziness that's been going on in the banking world lately, I'm sure there are bound to be some technical glitches as banks close, merge, purchase, sell off assets, etc., so check your bank and credit cards carefully to make sure you aren't being charged incorrectly.  Just because something appears on your official bank statement does not mean it's legitimate!  

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