Sign up for AARP's twice-monthly Your Health newsletter for the latest on the coronavirus pandemic and more.
Living on a Budget
by Ron Burley, AARP, April 20, 2009
A recent letter from reader Ronald Strempel had me wondering why what happened to him isn’t illegal.
Strempel and his wife, Bettie, are happily retired and living on Social Security in Cookeville, Tenn. Recently they used their Regions Bank debit card and inadvertently overdrew their account by $3. For that, they were charged a fee of $35. The bank notified them by mail, and in the meantime, unaware of the charge, the Stremples incurred other small overdrafts and more fees—more than $200 in all.
Charging $35 for a $3 overdraft is bad enough, but what makes this situation absurdly annoying is that Regions Bank, like many banks, tries to make its practices sound virtuous. Banks used to bounce checks. Now they call it a service or a courtesy when they don’t. The courtesy Regions afforded the Strempels was in effect an instant loan—in exchange for a hefty fee. And let’s be frank: ”Fee” is the bank’s term. If I loaned you three bucks and demanded $38 the next day, you’d point out that that’s more than 1,000 percent interest on the transaction. The term for that is “loan sharking.”
A quick Web search revealed that the Strempels aren’t alone in their dismay. On sites from RipoffReport.com to CreditCard.org, Regions Bank customers are screaming about the same overdraft policy that stung the Strempels. There is even a Web site titled BadRegions.com dedicated to consumer disgust with the bank. The fact that the bank notifies customers of an overdraft by mail only adds insult to injury. Wouldn’t you think that for $35, someone could make a phone call?
I called the Regions Bank branch where the Strempels opened their account. A flustered teller who answered the phone told me the manager was out of the office, but that she’d leave him a message. The following morning a call came not from the branch manager but from a vice president in corporate communications, Shanon Rust, who defended the practice of charging overdraft fees as standard policy in the industry, which is true enough. I asked her if she thought it reasonable to charge $35 for a $3 overdraft that the bank had allowed—if it was the right thing to do. She was polite but unmovable in her reiteration that the bank must stick to its policies.
For me, Rust’s stand represents a bigger problem than Ron Strempel’s. Many financial institutions have policies that don’t merely serve customers poorly; they exploit them. Banks can get away with this in the short term because they’ve seen that, most of the time, we won’t take our business elsewhere because it’s just too much trouble. It is a hassle to switch checking accounts or credit cards or investment accounts. However, companies need to realize that in this day of instant, widespread communication, word gets around. The worse the customer service experience, the faster the story will spread.
Rust understood that I’m a person who can spread a story. She agreed to reverse the overdraft charges for the Strempels. She also promised to help them get real overdraft protection—by tying their account to a credit card or credit line—so that they wouldn’t trigger outrageous fees if they had to fill a prescription a day or two before their Social Security checks arrived.
Please leave your comment below.
You must be logged in to leave a comment.
Annuity quotes & free retirement income check-up
Free consultation and follow-up plan
Guaranteed rate of return on an exclusive 8-month term
Members can save monthly on qualified AT&T wireless plans
You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits.
Your email address is now confirmed.
You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age.
You can also manage your communication preferences by updating your account at anytime. You will be asked to register or log in.
In the next 24 hours, you will receive an email to confirm your subscription to receive emails
related to AARP volunteering. Once you confirm that subscription, you will regularly
receive communications related to AARP volunteering. In the meantime, please feel free
to search for ways to make a difference in your community at