Do Banks Encourage NSF Transactions?
The FDIC recently published the results of a huge survey they undertook to review the insufficient funds procedures of a bunch of large U.S. banks. The results are interesting …
We’ll discuss other findings from the survey in later posts. For today, we’ll focus on one part of the FDIC survey. The FDIC tried to find out whether banks that charged customers NSF fees whether they tried to warn customers that they were about to overdraw their accounts before an ATM or Point of Sale debit withdrawal occurred.
That is, the FDIC asked if banks (who had the ability to do so), warned or alerted a customer who was taking out too much money at an ATM or point of sale terminal.
You would think that a bank would warn you, right?
Wrong!
The FDIC found that the overwhelming majority of banks only told customers that they overdrew their accounts AFTER an ATM or Point of Sale transaction occurred.
According to the FDIC:
…less than one-quarter (23.5 percent) informed customers at the time of the transaction, prior to its completion. Instead, a slight majority (54.5 percent) informed the customer subsequent to the transaction, via notification such as mail or e-mail, rather than at the time of the transaction; slightly more than 16 percent notified customers about NSFs at the time of the transaction, but after its completion.
For study population institutions with automated overdraft programs that covered POS/debit transactions (403 banks), only 7.9 percent of such banks notified customers of an NSF at the time of a POS/ debit transaction prior to completing the transaction. Instead, the majority (86.2 percent) informed the customer about an NSF subsequent to the time of the transaction, such as via mail or e-mail.
No wonder banks rake in the dough on NSF fees. They encourage them. And we end up footing the bill, and ending up on the ChexSystems list.
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