“That won’t happen to me”.
This statement rang out in my mind the day I opened up my 1st checking account. As I politely listened to the bank employee explain to me that if I spent more money than I had, I would overdraft and owe the bank 35 dollars, I decided that I would never need this piece of information.
I would never owe the bank 35 dollars because I wasn’t going to spend more money than I had. I was never going to fall behind on my checkbook register entries. And I was never going to buy stupid crap and waste money.
I was wrong.
Here’s the setup:
In June 2008, I went to Indiana for cross country camp with my teammates.
Throughout the week, I used my debit card to pay for food at the numerous fast food restaurants we visited. No problems there. Then, the Walmart trip happened. While there, I found a FM transmitter for my iPod that I had to have for the five hour car ride back to Ohio. And it was only 20 bucks. So I bought it.
I arrive back home on a Saturday afternoon.
On Sunday, I check my account balance. It’s something like 35 dollars. I go to Kohl’s and purchase a gift for Father’s Day. I knew this would bring my account down to just a few dollars.
On Monday, I call my bank’s automated phone system to check my account balance. The computerized voice tells me chillingly that “Your current account balance is neg-a-tive seventy dollars.”
Um…no. That is not possible. I know my balance is low…like single digits low, but absolutely not NEGATIVE.
But it was…so what happened?
Two fast food transactions I made with my debit card didn’t actually go through the system until Monday. So when I called the bank on Sunday, it told me I had around $35.00 dollars. Except I didn’t. $15.00 dollars had already been spent on food at Wendy’s and McDonald’s, the computer just didn’t know about it yet.
Then I spent 27 dollars on my dad’s gift. And the fast food transactions were processed.
Banks process transactions highest dollar amount to lowest dollar amount, so I didn’t overdraft on the gift purchase. I over drafted on the two fast food purchases.
So now, there’s 70 bucks down the drain. (35 overdraft fee X 2=$70.00)
But wait, there’s more!
Once I knew my account was negative, I sighed heavily and said “OK. I messed up. I’ll make a trip to the bank in a day or two and withdraw some money from savings and put it in checking.”
My bank charges me 8 dollars per day that my account is negative. So by waiting a day to get off my ass and fix a mistake, I lost 8 more dollars.
Total damage= $78.00. Ouch.
Looking back, I realize that I made a few obvious mistakes.
Mistake #1:
Relying on mental math. I was going around the entire week adding up rough amounts that weren’t very accurate. Then, I went to Kohls like an idiot knowing full well that my balance was dangerously low.
Mistake #2
I wasn’t keeping up with my checkbook register. If I had been, I would have known to stop using my debit card before I over drafted.
Mistake #3
Not knowing what fees my bank charged. I honestly had no idea that I would be charged extra fees for leaving my account overdrawn. Always read the fine print!
So there you have it, an overdraft from start to finish. Just how easy is it to overdraft? Very. And yes, it can happen to you and it will if you aren’t careful.
{ 6 comments… read them below or add one }
Wow, that’s terrible. When I was your age my card got declined if I tried to spend more money than I had. Embarrassing, but on the whole probably a better option.
Now that I’m older, rather than worry about transferring money from savings to make up a shortfall for a few days, I have a line of credit linked to my chequing account. If I spend a bit more than I have (actually up to $5000, but I think the most I’ve ever drawn was about half that), I just pay interest for a few days until the next paycheque comes in. In total, this has maybe cost me $5 in interest since I set it up – much less than a single mistake without it.
Now that you’re in the black, you might try this: Call the bank’s customer service and see if they will forgive one or both of the overdraft fees. Since it’s your first time, they may be willing to give you *something* back!
Oh, I tried to get them to forgive the charges but they didn’t agree. To be perfectly honest, I didn’t push very hard. I just paid my dues and went on. If it ever happens again for some strange reason, I’ll be pushing a lot harder!
I would try again and push harder this time. Tell them that you got hit with two charges. Now is the best time because you never got an overdraft fee before. If you wait until later, it would be harder to push them on it since you have these overdraft fees listed.
Anthony, those fees happened way back in June of 2008. I also closed the account a few months ago, so there’s no use in calling them again. But I do agree, you have to be firm and ask for exactly what you want.
Was this National City Bank (now PNC)? I ask because this sounds just like the fradulent overdraft fees they just got sued for. When I was 16, I caught them charging me OD fees for items that had been posted in a different order than I charged/deposited them… I don’t want to post a link because it might look spammy but if you Google “national city overdraft class action” I’m sure you’ll find it.