Banks and Credit Unions Adding Excessive Hidden Fees
Always be wary about what you’re being signed-up for when you open a new account, particularly at credit unions. Some will enroll you in programs or for services automatically. Alternatively, a service representative may offer features or services to you with a brief explanation, and then provide you pages of disclosures after the fact.
When you’re opted-in to a program, be sure to read the fine print or the documents that come afterward. Then make sure the bank is following its own policies and procedures. Many consumers are losing their hard-earned money to excessive fees – fees like overdraft charges that are expensive and do not really reflect the risk to the well-funded banks imposing them on you, and that may not be fair or consistent with the credit union’s disclosures.
Credit Unions Charge Hidden Fees
Be especially careful when using ATMs. You could lose significant money just for checking your balance and taking out your own money. With interest rates so low, the banks have to make their money somehow, and these fees are a money-maker for them.
Some Credit Unions charge customers fees for not having enough money in their accounts when in fact, they do. Sometimes they charge multiple fees for one transaction. Additionally, some credit unions charge fees for using other banks’ ATMs. Some charge for simply checking the balance on your account.
This tactic of hidden fees isn’t new. Traditional retail banks have done this for years, but many of them are not protected by arbitration agreements that effectively prohibit lawsuits. Unfortunately, Credit Unions have continued these unfair practices, but some do not have arbitration agreements, so you could have some recourse in a class action. Your best bet, however, is, don’t waste your money on fees from credit unions!
Credit unions sometimes charge insufficient funds fees when the funds are actually available or they charge multiple fees for a single transaction. When you use your debit card, you probably have seen in your accounts that first, there is an authorization that goes through. It shows as “pending.” Sometime later, the money is actually transferred from your account to the merchant.
In your “deposit agreement” or similar documentation with your bank, there is a discussion about overdraft fees that you have to pay when you do not have enough funds in the account to pay for checks or charges you have made. Sometimes a credit union will charge you the overdraft fee even if your account never actually went into the negative. Check your account statement to see what the balance was at the time when the transaction actually posted – when the money was actually taken. You may be paying fees when you actually had enough money in the account when the transaction actually went through.
Federal law requires that banks and credit unions receive affirmative consent from account holders before charging overdraft fees for ATM and/or non-recurring debit card purchases. Sometimes, the credit union “opt-in” disclosures do not reflect the true overdraft policies that the credit union is actually applying, and therefore, you have not consented.
Worse yet, some credit unions are charging people more than once for the same, single transaction! The credit union may charge you once when you make the transaction, and then again when it automatically tries the same transaction again at a later date. When you maintain a low balance in your accounts, these fees can cause a downward spiral that can add up to hundreds of dollars in loses very quickly.
Credit unions sometimes charge double ATM fees for simply checking your balance.
When you use an ATM at a financial institution other than your own credit union, you may be subject to fees. The company that owns the ATM may charge a fee. Your own credit union may charge you another fee on top of it. These financial institutions may be taking large percentages of your money just for this service, which is readily available and accessible to everyone. The double-fee isn’t always disclosed because the language is often vague.
Be careful, because if you check your balance, there’s another out-of-network fee. So you could end up paying three fees for simply checking your balance and taking your money out of an ATM. While you could just not check the balance, but then you run the risk of paying overdraft fees as described above.
The bottom line is this – with interest rates so low, banks have to make money somehow and these fees appear to be a money maker for some credit unions.
These practices may violate consumer protection act statutes. If you have paid fees for over-drafting your account or for using an ATM outside your credit union, take a look at your disclosure documents and statements, or give us a call and we’ll review them for you. You may be entitled to compensation.
Justin Browne, Esq.