Banks.com.au - Australian Banking, Finance and Investments

21 November 2007

One of the things that irritate many bank customers is the fee that is charged when you overdraw your Debit Card account. In many cases these fees are debited against your balance after transactions are processed that haven't been accounted for by the user.

The bank line, which is technically correct, is that you are obviously responsible for maintaining your account in credit.

However, many people use their debit cards and end up overdrawing their account because, according to banks, a merchant hasn't processed your purchase.

You may notice from time to time that a transaction is immediately taken into account on your online bank statement and is immediately reflected in your balance. If the merchant doesn't process the transaction within a couple of days the funds are recredited to your account giving you a false balance.

Many debit card users don't know how the system works until they find that they have overdrawn their account and are charged a fee. In my case it was $40.

I can't speak for everyone, but there is no way known that I'm paying $40 for what I consider to be a bank error. If indeed it is an error.
It's a very simple excuse to give, blaming the merchant for not immediately processing your transaction.

A debit card account needs your own funds deposited in it for you to be able to use it. If it worked on a credit basis it would be called a credit card

A few weeks ago, I had to venture to the bank to deposit funds from one bank to another. However, I wanted to get reimbursed my $40 before I made a deposit.

I was told by a bank officer who I found out didn't have the authorization to recredit my account, that I had to cop the fee because it was my fault having made a withdrawal on such and such a date. Which I proved through my balance was not the transaction that overdrew my account.

Funny enough, there was a lady in front of the next window having the same argument with the teller.

She was being told that she would also have to accept the fee because she made the transaction while there were insufficient funds in the account.

She also said that there were sufficient funds in her account when she made the withdrawal and she shouldn't be paying the fees.

She left before I had finished with a statement sent to her so she could see the withdrawal. I presume she would have paid the fee.

However, I wasn't as gullible. There is no way I am ever going to pay a fee for overdrawing my account when there are funds in my account for me to draw on.

I make far too many transactions on my account to keep and maintain a precise record at all times. I do have a rough idea of my balance at all times, but it certainly isn't exact.

If this situation happens to you, Don't just accept it

I was reimbursed my $40 fee on two occasions. Obviously, since then I have taken far greater care of my balance because it really is a time consuming exercise to get your money back.

I had to waste more of my time on the phone after the service in the branch, which is best described as incompetent, didn't get the desired result.

The first time I noticed this $40 bank charge resulted in a quick phone call and the money was reimbursed immediately. I did have to wait a couple days for the actual money to appear in my bank account but it was all authorized immediately.

On the second occasion that I had my $40 overdrawn fee reimbursed, I was told by the bank officer that she would recredit my account this time because records showed that it was only my FIRST reimbursement of this particular bank fee.

As you can imagine, I didn't want to point out that it was my second such request.

Now, I don't know what the banking system is that they use to note your reimbursements of any complaints but I would have no hesitation in again calling, complaining and expecting to have my funds recredited to my account.

Furthermore, I certainly wouldn't be hanging up the phone until I have been told the funds will go back into my account.

One can only wonder why a bank would put money back into your account after taking it out to pay for a transaction. Maybe they want you to make an extra transaction or transactions to overdraw your account so they can charge you a fee? I don't know.

I do know it is very easy to overdraw your debit card account. I would presume that the vast majority of debit card customers have done so. I would also presume that the majority would have done so after a transaction 'appeared' on their statement after they had made their final withdrawal having checked their balance on their statement.

When you call the bank to complain:

- Make sure that you know which transaction overdrew your account. The person on the phone answering your complaint will in all likelihood tell you that transaction X was responsible for you overdrawing your account. You can advice them that it was transaction Y not X.
Taking into account the current balance and fee should point out that it was not the transaction they are referring to. Having done this you are more than halfway to getting your money back.
- Don't just accept the banks version of events and that it's the merchants fault. Point out to them that you have a debit card because you don't want a credit card. You shouldn't be able to overdraw a debit card because it only works by you putting funds into your account.
- You will probably be told that the banks offer this overdrawing 'service' to customers so that if they are ever caught short at a supermarket then the transaction will be processed.

Just ask them if you can go to the ATM and withdraw $200 even though you don't have the funds in your account. It won't return an insufficient funds message?

If the person answering your inquiry will not refund your overdrawn fee then ask to speak to a supervisor. If they are indeed the supervisor then ask to speak to their boss. Be prepared to spend some time on the phone putting your case forward.

I have had to go through this exact process on two occasions for two wins for the customer who is always right.

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