NEWS BLOG (WSAU) It’s a Friday afternoon and you have $100 in your checking account.

You go to a restaurant on Saturday night and pay $25 for your meal on your debit card. Then you go to the local big box store and put another $40 on your debit card. Sunday morning you buy coffee and bagels, and put another $10 on your debit card.

Suppose, hypothetically, on Sunday night you pay a $150 electric bill and send it off in the mail. You’re not expecting that check to hit your account until Tuesday, and you’ll make a deposit before then.

But – surprise! – your check arrives early and hits your bank account on Monday. You’re overdrawn. Your bank is entitled to charge you an overdraft fee. There’s nothing unusual here. Everything is proper.

Some major banks would charge you four overdraft fees – claiming that your meal, your big-box purchase, your coffee, and your electric bill all bounced. How could that be? These banks change the order of your transactions, especially when you spend over a weekend and multiple transactions come in on the following Monday. They process the largest transaction first, making it more likely that there won’t be enough money to cover the smaller charges. It’s a policy that maximizes bank fees at their customers’ expense.

This is one of the problems when banks become fee-based instead of portfolio based. Many larger banks make most of their money based on what they charge for their services (and the charges they get from merchants for processing debit card fees). So your banker has an interest in how much they charge you, and has little incentive to lower costs or be consumer-friendly. This is a huge contract to the traditional banking model, where banks made money by lending.

U.S. Bank announced a $55-million settlement today over these kinds of overdraft fees. If your bank treats you this way, perhaps you’d like to take your business elsewhere.

Chris Conley
7/3