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Home >> Checks/Money Orders >> Checks You Wrote
Overdraft Fees for Authorized Transaction Holds?
I want to know if it is legal to charge overdraft fees on funds held as authorized transaction holds (pending transactions). I have $80.00 on my checking account. I made three additional purchases adding up to $60.00, and these are placed on hold as requested by the merchants. As a result, I have an available balance of $20.00. I then made another purchase of $25.00, putting my account at a negative balance of $5.00. At this point, the merchants collect their monies from the funds that are on hold, but because the account is at a negative on this day, I am charged overdraft fees on the three transactions for which monies were available and on hold in addition to the transaction that got me to a negative balance. I understand if another merchant tried to collect funds, but these are the merchants for which the funds are being held. Please advise.
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 In theory, the last item triggered an NSF fee which is paid and that may have caused another item to not pay, and another NSF fee for that, and so on. It can be influenced by paying larger pending items first. This is not prohibited (unless it is by your state). That doesn't make it right or wrong, but your choice is to complain to the bank, its regulator and your state lawmakers and to vote with your wallet by going elsewhere, or in avoiding this low balance problem in the future.
Published on BankingQuestions.com 10/20/10
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