You Don’t Need Overdraft Protection

I knew it! Today’s Wall Street Journal story “Wells Fargo Managers Pushed Overdraft Services” exactly recounts my experience as the bank’s customer. Few years back, during a routine phone call, a banker offered to add overdraft protection to my account. She pitched it as an important benefit. I paused and replied that the account never overdraws. But she pressed, encouraging me to take the service—and did so four more times.

See, we had an exchange, where I pushed back hard. “If I overdraw the account, you don’t pay, right?”—being well aware of the 2010 Federal Reserve regulation regarding overdrafts. If customers don’t opt in, the bank doesn’t pay the bill and there is no fee. “You can charge only for overdrafts if I sign up, right?” She sidestepped, at first, avoiding the answer and touting the benefits to me. 

“Banks became concerned the regulation would crimp this income stream”, AnnaMaria Andriotis and Emily Glazer write for the Journal. “That prompted individual managers at Wells Fargo to push personal bankers, staff in bank branches who deal with retail customers, to find new ways to get customers into the service, according to current and former personal bankers and managers in Florida, California, Georgia, Nebraska, Virginia and Texas”.

Ah, yeah, I live California. Overdraft protection was pitched as good for me; something that instead rewards Wells Fargo. I told her so, and she eventually conceded my point. I since tell anyone and everyone not to sign up for overdraft protection from any bank.

As recently as last week, a banker pressed me to sign up for the service. A friend, who is a Wells Fargo customer, got slammed with hundreds of dollars in fees last month when he caught the flu and his account overdrew while out sick. The guy had signed up for protection at the insistence of the branch where he opened the account.

Don’t you get caught, too.