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#26640 - 08/02/02 07:43 PM Bounced drafts on a savings account
Anonymous
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It's the end of a long week and I don't have the mental energy left to think through this one that just came in via email from a banker friend. Those of you who are still running on all your cylinders can sell me a vowel or two.
Here's the question:

We have a savings account customer who keeps showing up on the overdraft list. They are having their bills drafted through the savings account. The problem is it does not generate a return check charge, so we are maintaining a problem account for free. Is it legal to charge a savings account a return check charge? Can we force them to open a checking account instead?

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General Discussion
#26641 - 08/02/02 07:54 PM Re: Bounced drafts on a savings account
Bear Collector, CRCM Offline
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Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
MB,
It HAS been a long week, but my initial reaction to your question was two-fold:
1. Is the customer violating Reg D? If so, you are allowed to convert their account to a checking (transaction) account and charge them an excessive transaction fee if that is the bank's policy, and/or
2. Close the account for unsatisfactory handling. Where is it written that a bank must provide the vehicle whereby a customer can mishandle their funds and do it for free?
Leslie
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Being kind is more important than being important.

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#26642 - 08/02/02 08:10 PM Re: Bounced drafts on a savings account
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,546
On the Net
Short answer, yes you may charge a savings an NSF fee so long as it is disclosed. Savings accounts may be overdrawn, although it isn't a common practice because it is more difficult to make withdrawals from these. This is in part due to Reg. D. and limited withdrawals via POS, higher fees for withdrawing those funds, etc.

I suspect this may be more common if banks allow Internet banking on these accounts.
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AndyZ CRCM
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#26643 - 08/02/02 08:12 PM Re: Bounced drafts on a savings account
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,796
Cape Cod
I have one or two synapses still working, so I'll have a go at it --
In reply to:

Is it legal to charge a savings account a return check charge? Can we force them to open a checking account instead?


  1. Unless there is a state law to the contrary, you can impose whatever charge you want on a savings account. Of course, you'll have Reg. DD change in terms notice issues.
  2. You can also forbid customers from drafting their savings accounts for third party payments. Just because Reg. D would permit limited third party transfers doesn't mean you have to allow them.
I see nothing wrong with informing the customer that this activity is not permitted in his account (assuming you generally forbid it), or if you are unwilling to forbid the activity, that you will not tolerate drafts against NSF in such an account. Then, follow through. I agree you have no obligation to keep any account open, especially for customers who won't play by simple rules.
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John S. Burnett
BankersOnline.com
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#26644 - 08/02/02 09:07 PM Re: Bounced drafts on a savings account
Anonymous
Unregistered

Bless you! You folks just made my day!

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