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If you had any doubts about fees being a major profit center for banks, just consider the more than $2 billion Chase Bank raked in last year from overdraft fees alone. Chase led all banks in overdraft fee revenue in 2016, increasing its haul by nearly $300 million from the prior year. Make no mistake, overdrafts are big business for banks that count on the revenue to meet their profit expectations.
In terms of overdraft charges and policies, Chase is no worse than most of the larger banks, and it has even taken a couple of small steps to make its policies slightly more customer-friendly. However, anyone who banks with Chase should keep the fees in mind whether they have a student or a standard checking account. Here is a breakdown of the Chase Bank overdraft fees and how customers might be able to get them waived.
Overdraft Fees and Practices
As big banks go, Chase Bank’s overdraft fees and policies are fairly standard — $34 per overdraft with up to three overdraft charges per day. However, Chase won’t charge a fee if the account is overdrawn by $5 or less. Also, if your account is overdrawn for five or more consecutive business days, Chase will charge a $15 extended overdraft fee regardless of how much it is overdrawn.
It’s standard overdraft practice is to pay for an item when there are insufficient funds and then charge the account a $34 fee. Chase has discretion over which items it will pay, basing its decision on the account history, frequency and amount of deposits made, and the transaction amount. If it does not cover the transaction, it will be declined or returned unpaid. Chase will not cover debit card transactions. If you try to use your debit card with insufficient funds, the transaction will simply not go through and you won’t be charged a fee. If you are able to cover your overdrawn balance by the end of the business day, you will not be charged a fee.
Chase waives the extended overdraft charge for its Premier Platinum Checking account. It will also waive insufficient funds and returned item fees if you have less than five occurrences in the past 12 months.
How Chase Banks Overdraft Fees and Practices Have Changed
Chase Bank’s overdraft fees haven’t changes much over the years. It has always charged near the top range of overdraft fees. It has, however, changed its practices due in large part to a 2012 class action lawsuit. Chase was caught up along with 30 other banks in the fee-gouging class action suit which claimed the major banks were stacking customer transactions in a way that resulted in excessive overdraft fees. Instead of reporting the transactions as they occurred, the banks would stack them all at the end of the day and report the largest transactions first instead of chronological order. This would often have the effect of triggering multiple extra overdraft fees.
The primary cause was the overdraft protection policy that covered debit card transactions when there were insufficient funds. A customer could make several debit card purchases without realizing there were insufficient funds. Each transaction could potentially trigger a separate overdraft. However, if the small debit card transactions were made early in the day when there were sufficient funds and a large debit transaction occurred later in the day to cause the overdraft, the bank would stack the transactions largest first, which created an overdraft on every transaction.
Although Chase claimed no wrong doing (there was no regulation against the practice), it paid a $110 million fine and changed its overdraft protection policies. Following the settlement, Chase changed its debit card overdraft protection plan from Opt-out to Opt-in, so customers were not automatically enrolled in the plan. That is when Chase also instituted its policy of not charging an overdraft fee on overdrawn balances of $5 or less.
How to Get an Overdraft Fee Waived
Anyone can request to have an overdraft fee waived. At Chase, your appeal stands a better chance if you are a Premium Platinum Checking accountholder or have a good deal of money with Chase in various accounts. It could also help your appeal if you have a Chase credit card with a balance and a pristine payment history. Your chances also increase if the overdraft amount is small and you have no other recent occurrences.
Author: Andrew Rombach