Target 11 Investigates Hidden Bank Fees

The bank overdraft fees kept piling up for William Keller of Trafford, Westmoreland County.

"I was in the hole $371, then $403, and it just kept adding up and adding up," said Keller.

It happened after Keller's landlord accidentally cashed his rent check early.

Keller said the bank refused to reimburse him for the overdraft fees and said the basically treated him like a criminal.

Keller's is just one of hundreds of complaints Target 11 has received about bank overdraft fees.

According to the federal reserve, bank and credit card fees costs consumers approximately $50 billion every year.

Right now many banks will automatically pay checks and debits that come into an account even if there's not enough money in the account. The banks will then charge customers a $35.00 overdraft fee for each transaction.

Beginning in July, banks must get a customer's permission before providing the overdraft protection. That means consumers will have a choice.

But Target 11 has uncovered some steps you can take right now to protect your money.

Thomas Nist is the Director of Responsible Financial Management Practices at Duquesne University, and a former banking industry executive.

Nist spent 30 years in the banking industry, and he knows the tricks of the trade.

He outlined one called Top Down Processing. He said that is when the banks cash the larger checks first and bounce the smaller ones.

Nist said consumers have to take action to stop that. He suggested signing up for an alert service.

Many banks have a system in place to send out an e-mail or text message when an account drops below a certain balance.

Nist said it's also a good idea to make sure a savings account is linked to a checking account just in case a check bounces.

And he said customers who don't want overdraft protection must tell the bank up front. But before doing that, customers may want to consider some important things.

"If you chose not to pay the fee, the bank is not going to pay the check and that will be returned, and then you'll have a fee," said Nist.

Target 11 discovered that some local banks are already making changes.

PNC, for example, will send an e-mail or text alert when the balance drops. They've also lowered the first overdraft fee from $31.00 to $25.00. And they reduced the maximum number of overdraft fees per day from 10 to four.

And beginning in June, PNC will eliminate fees if an account is overdrawn up to $5.00.

Starting in March, First Niagara will also waive fees for customers overdrawn up to $5.00.

They will also limit overdraft fees to five per day. And an account that remains overdrawn for seven consecutive days will only face a one time $35.00 service fee.

"We're going to move into an area of complete disclosure, better consumer understanding of how this stuff works and I think we will all be better off," said Nist.

Beginning July 1, banks will be required to get a customer's permission before providing them with overdraft protection.