Why do banks charge a fee on "insufficient funds" when they know there is not enough money?

Tonight I had to go to the chemist to get some cough syrup for my son, and got my cards mixed up. I took my ANZ savings card (balance$7.70) instead of my Westpac Card (where most of my money was). Bought the syrup, using my ANZ card eftpos, for $10. Then went and bought take away dinner via same card eftpos $15.

Tonight I had to go to the chemist to get some cough syrup for my son, and got my cards mixed up. I took my ANZ savings card (balance$7.70) instead of my Westpac Card (where most of my money was). Bought the syrup, using my ANZ card eftpos, for $10. Then went and bought take away dinner via same card eftpos $15. Both transactions successful.

Then I went to non-ANZ teller and tried to withdraw $200. Insufficient funds!! Oops, I'm using the wrong card, I thought. Now how much am I going to be slugged for those two previous transations?

And how is it that the bank can say I have insufficient funds to withdraw $200 but it would still let me debit those other transactions before that? I feel there is a huge scam going on with these banks- they know when there are insufficient funds but they won't let you know unless the amount you accidentally withdraw is too much. Small amounts, they don't mind—-'cus it costs them next to nought and they can charge you a massive fee every time!!

This is complete bullshit and I am very angry. If I now deposit the funds into the account to cover the loss will they still charge me? I am fuming, how can they get away with this and has anyone known anyone to challenge them on this??

Best Answer:

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Other answer:

I work in a bank. Someone a few posts above me said that you must have had enough in your account to cover the cough syrup, but not the $200 withdrawel. That isn't the case. What happened to you is actually relativedly rare. While accounts do overdraw all the time in relation to electronic direct debits (for example), actually allowing you to make an EFTPOS transaction in an account with insufficent funds only occurs when you are a) using another bank's EFTPOS system (ie you bank with ANZ but the Chemist banks with CBA) coupled with b) a communication error between the EFTPOS and your Bank.

Now, you should (and I stress the 'should') be able to get a refund, because while your account is able to overdraw, and you probably would not receive a refund if it were your Foxtel direct debit (a common example I see at work), if you call and explain the situation, you should be able to get a goodwill refund because it is unusual.

In relation to your comments that it is a huge scam – unfortunately, it is just the way it is, The fee's are legal, and while annoying, legally there is nothing you can do. All banks, credit unions etc charge them. If you are, for example, receiving only Centrelink benefits, some banks have accounts that will not allow you to overdraw at all, which means there will be no fee charged. The problem here is that if you have, for example, a Direct Debit for Car Insurance, and when it falls due you do not have sufficent funds, the bank will not allow the debit, and you will not be charged a fee. However, your car insurance WILL charge you a fee, and if you have an accident whist being behind in payments, you are not covered.

So you can see that there are upsides to being allowed to overdraw, as well as the obvious downsides.

May I suggest the following:

1) Check your balance tomorrow, and see if your account is in debit.
2) Wait until you can actually SEE the overdrawing account fee, which would be around $30 depending on the bank
3) Once you can actually see that the fee has been charged, and I mean with the official transaction description, call the banks call centre.
4) Remain calm at all times, Reiterate that you accidently used the incorrect card, but that you assumed that if you did not have sufficent funds, the bank would dissalow the transaction.
5)Mention (but only if it is the case, because they will be able to check) that you have not had a fee refunded before, and that you would like one on this occasion.
6) They may try to negotiate a half refund, for example $15. They will say that this is a goodwill gesture, as technically it was not a bank error.
7) If you are happy with this, then accept the offer. If you are not happy with this, let them know you want a full refund.
8) If the operator refuses this, or refuses even the half refund, say the golden words 'Can I please speak to your supervisor?'
9) If you have not had a refund before, the supervisor will refund the fee, unless at any stage you have become abusive/rude.

SO, in a nutshell: be nice, stay calm, and if they wont do it, ask for their supervisor.

Goodluck, let us know how you go!

the charges go through because they are entered by the vendor and don't get posted to your account until the vendor submits the paperwork, the ATM however is directly communicating with the bank and isn't going to let you take out money you don't have. next time I bet you will pay better attention, consider this an expensive lesson
Beverly S:
It's in the agreement you sign when you open the account. This is how they make money. Perfectly legal since it is up to you to know how much you have. If you put cash in today you MAY not be charged.
Fume all you want while you read the agreement you signed when you opened your account with the bank.
Yes, they WILL deduct the overdraft fees from your next deposit. That is the way the banks make their profits.
Ryan M:
Why do morons spend more than what they have in their account?? Is second grade level math too hard for them?

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