38% of Overdraft Fees Are Caused By Debit Card Point of Sale Errors. You’ll Pay.

February 28, 2008

The Sampson family ordered food on Saturday night from Burger King for a total of $22.43. Unfortunately a the cashier charged them $2243.00 as he put the decimal point in the wrong place.

Mr Sampson noticed the error a day later. He told local media that as a result of this his bank account was now overdrawn by $473 so anything coming through at midnight was going to be charged a $35 fee.

Burger King said the manager wasn’t able to correct the mistake as it was a holiday weekend.

A quick meal at a student’s neighborhood Burger King ended up costing a lot more than he expected when he got the $655.00 bill.

He ordered a veggie burger when he pulled into the drive-through window. He used his debit card to pay for the 96 cent meal but instead it charged him $655.

The electronic charge went through to his account and took him overdrawn. This left him unable to pay for other purchases including his rent. Of course this resulted ion heavy overdraft fees. The manager at Burger King couldn’t credit his account but said that the baml shouldn’t have covered the transaction if he didn’t have the money.

This is not a story knocking Burger King More of a warning about how debit cards can cause big problems. Debit cards are linked directly to your bank account. You can use them to buy goods or withdraw cash and the amount is taken from your account right away.

Many people don’t realize that a carefree swipe of their debit card at a point-of-sale terminal to buy a Cheeseburger could result in “courtesy overdraft” fee of $30 or more. But such fees are becoming increasingly common. When faced with a transaction that would send a consumers’ account into negative territory, banks now regularly approve such transactions, cover the expense, and charge hefty fees.

In its report, called “Debit Card Danger,” the Center for Responsible Lending said that 38 percent of overdrafts were caused by debit card, point-of-sale transactions,

“If you ask people on the street what would happen if they tried to make a debit card purchase and their account was empty, most people assume the bank would deny it.”

Not any more. Beginning several years ago — no one really knows when — banks slowly got into the business of granting short-term, high interest loans to consumers when they attempt to overdraw their accounts. Account holders are automatically enrolled in the programs, which are now standard at nearly all banks.

Consumers who are unaware of courtesy overdraft do not know that the price of their Big Mac can jump from $1.99 to $42 in an instant. There’s also another more warning consumers should have Not only can they unknowingly overdraw by making debit card purchases, but they can overdraw while getting cash from ATMs, too. That might not sound possible — after all, once upon a time, ATMs would simply deny withdrawals that exceed balances.

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