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Overdrafts After Check Clears
If a check has cleared the bank on a particular date, why is the bank still doing an overdraft fee on my account? Is this legal after it has cleared?
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 Your question can be read in two ways, so here are two answers.
Interpretation 1:
"I deposited a check in my account. My bank put a hold on the deposit, but the check cleared at the bank it was drawn on before the hold ended. Should my bank still be charging me overdraft fees on my checks after the deposited check has cleared?"
The duration of holds that your bank places on deposited checks are only loosely related to the time it actually takes for a deposited check to clear, and it takes time for a check to get back to your bank if it doesn't clear. Sometimes a check is cleared before a hold expires. Often, however, holds expire well before bad checks make it back to the bank taking them for deposit.
Your bank has no idea when a deposited check is actually paid by the bank it's drawn on, because banks don't share that information. Because most checks are paid without problem, banks only hear about the checks that bounce, so your bank will usually keep its hold active for however many days it was set, even if the deposited check has cleared sooner. If you draw checks on the held funds, your bank may pay your checks and charge you a fee, or return your checks unpaid, for a fee.
Interpretation 2:
"My bank paid my check a few days ago, even though it overdrew my account. Now they adding more overdraft fees, even though I haven't written any more checks. Can they do that?"
Your bank may have an ongoing overdraft fee designed to encourage you to bring your account back to a positive balance sooner. You should have received a disclosure of that fee when you opened the account, or when the bank added the fee to its checking account products. Whether or not such a fee is legal will depend on whether the bank is subject to a state law prohibiting that kind of fee.
Published on BankingQuestions.com 9/11/08
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