Remember the practice of shuffling checking account transactions to maximize overdraft fees? Banks are now paying for it, although they still came out ahead.
Chase used to re-order all the transactions that came through your checking account each day. They claimed that it helped you make your most important payments (generally the largest payments like rent, mortgage, and insurance premiums). Consumer advocates saw it differently: by blowing out the majority of your account balance in one transaction, those small debit card purchases could produce more overdraft fees.
According to MyBankTracker.com, Chase agreed to pay $110 million to settle complaints about the practice, and other banks may have to pay up as well.
Most banks have stopped the practice, and they're not even allowed to charge overdraft fees in many cases without customer consent. However, MyBankTracker founder Alex Matjanec notes that 100 million consumers have opted-in to "overdraft protection" programs.
Further reading:
- Reminder: Overdraft Protection is Optional
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