Where does my money go?

Do you believe it? There is a kind of bank card which can swallow your hard-earned money like a tiger does! Last week, I was in urgent need of money to buy something. I was expecting to see many new banknotes were presented in front me after inserted my Commonwealth debit card into the ATM. Unfortunately, nothing came out of the ATM, but a short sentence was displayed on the screen: “insufficient funds”. Where has my money gone?

I am wondering why my money can disappear so fast from the bank card. After checking my bank transaction, I found that I was fined by Commonwealth Bank $10 due to an overdraft. This kind of fine is called ‘overdrawing approval fee’. I am also wondering why the bank allows me to overdraft as it is just a day-to-day savings account, which is not a credit card. If only I could be informed of the balance when I use debit card to consume something, I would not be overdrawn and pay so-called ‘overdrawing approval fee’.

People nowadays prefer paying their bills such as shopping and dining by bank cards, because the bank cards provide them an easier and a more convenient way in comparison with cash. Paying by bank cards only requires users to put their bank card on the POS machine and enter their password. However, about using debit cards, one thing need to be focused on is that banks do not send notifications about your bank transactions. It means that you will never exactly know the balance of your debit cards unless you log on to the bank website to check your transaction.

When I talked about this encounter with my friend, Heather Wong, she told me that she had a similar experience. “I set up a Direct Debit for my Vodafone phone bill, on every 20th, Vodafone will charge me $34.99 from my Commonwealth Bank account. On 27th May, I found that I could not withdraw money from ATM. So, I logged in the bank website to check my bank transaction. Much to my surprise, the balance of my account is -104.99! It includes $34.99 mobile bills and $70 overdrawing approval fees,” Wong described, “I know overdraft is my fault, but I do not know when my account is overdrawn. It is impossible for everyone to check his or her bank balance every day. There is not any information or notifications told me that my account was overdrawn. I found this issue after my account had been overdrawn for 7 days. The ‘overdrawing approval fee’ is $10 per day, which is increased daily. I cannot imagine the results if I did not check my bank transaction. ”

From the Commonwealth Bank’s official website, ‘the overdrawing approval fee’ is charged when banks authorize a payment when there is not enough money in customers’ account for the payment to go through.

Lisa Li works a customer banking specialist works at Commonwealth Bank. She said that the Commonwealth Bank allows every customer with a debit card to overdraw once per day irrespective of the number of transactions. The ‘overdrawing approval fee’ is usually charged the next business day, which is $10 per day and it will be increased over time. Therefore, customers should better pay the ‘overdrawing approval fee’ as soon as possible if their accounts are overdrawn.

However, how can customers know whether their accounts are overdrawn or not? Apart from logging in the bank website and checking their bank balance after every expense, is there any simpler way like sending emails or SMS notifications? The answer is no. In this situation, the Commonwealth Bank customers have to pay more attention to their bank transactions and balance in case of overdraft and being fined by the bank.

Is it only the Commonwealth Bank which charges ‘overdrawing approval fee’ in Australia? In order to eliminate my confusion, I enquired to staff in another bank company: Australia and New Zealand Banking Group Limited (ANZ). From a customer banking specialist in ANZ, Kenneth Quach, I know that ANZ also charges ‘overdrawing approval fee’ if customers have overdrawn. The ‘overdrawing approval fee’ of ANZ will be charged $6 per day when customers’ accounts are overdrawn by more than $50. ANZ customers will be charged a maximum of 10 days within a month, and a maximum of $60 per month. Quach mentions that the ‘overdrawing approval fee’ of ANZ is less in comparison with Commonwealth Bank.

Similarly, both the Commonwealth Bank and ANZ will not send any notifications and emails to customers actively if customers’ accounts are overdrawn. “There is no regulation to prevent the banks from doing this because this is a way that the bank makes money.” Quach explained.

“A bold idea jumped in my mind when I got to know I need to pay $70 overdrawing approval fees to the bank,” Wong said, “I intended to refuse to pay the overdrawing approval fees at that time, because I did not realize my bank account was overdrawn and no notifications that the fee has even come out. I do not know when my account was overdrawn and also do not know I need to pay the overdraw approval fee which is even keeping rising from day to day. It is really unfair.”

“If customers do not pay overdrawing approval fees month by month, their accounts will be collections and be blocked,” Quach said.

To my great surprise, ANZ would not send any kind of notification to customers even though these customers continually avoid paying ‘overdrawing approval fee’. In the other words, ANZ does not inform customers whose accounts are overdrawn for a long time. Quach: “But we will block their accounts if they do not pay the overdrawing approval fees after 2 months. These customers need to pay all overdrawing approval fees in their accounts if they want to continue to use their bank card.”

There are plenty of people are confused and dissatisfied with overdrawing approval fees of debit card in the “ support community” (a discussion area) of Commonwealth Bank website. Two examples are given below:

1. “The amount that was overdrawn just came right on out with no email notifications that it was trying to make the withdrawal, and no notifications that the fee had even come out. Super sneaky. I want MY $10 put back in right away or I will change banks. No kidding.” (Posted by Harelequin)

2. “If Commonwealth Bank does not start value its customers, it will start losing them. I have been refused a refund of overdrawing $10 fee today for a one day overdraft of $100. Shocking!! I will be closing all my accounts unless another Commonwealth Bank manager shows more respect regarding this very matter.”(Posted by not_happy)

Another thing I do not understand is why debit cards can be allowed to be overdrawn. Unlike credit cards, debit cards are mainly used to deposit and withdraw money. If debit card can be overdrawn, banks should let customers know.

People are willing to deposit their money in their debit cards, which means that they trust the bank they have chosen. However, the banks try to charge customers with various methods such as ‘application fee” (fees for applying bank cards), ‘additional transaction Fee’ (formerly Excess Withdrawal fee), ‘balance transfer fee” (fees for balances transferred from other banks), ‘overdrawing approval fee’ and so on.

To be frank, it is reasonable for banks to charge customers overdrawing approval fees if their accounts are overdrawn, but banks should inform customers rather than continuously charge them ‘overdrawing approval fee’ daily without any notification.

Allowing debit card to be overdrawn and then charging hefty fines are similar to Pozi scheme, which uses high profits as a lure to gain customers’ investment. As can be seen, banks assert that allowing debit card to be overdrawn is convenient for customers, but they actually make much money from careless customers.

The Commonwealth Bank is one of the largest financial service providers in Australia, managing assets of over $782 billion and with approximately 4.6 million online customers throughout Australia (Canstar, 2016). It means that the Commonwealth Bank can gain $32 million per day if more than half of customers were fined owing to overdraft. Not to mention in other cases, including ‘application fee’ and ‘balance transfer fee’.

As customers, there is no doubt that we cannot stop using debit cards and change the current situation. The only thing we can do is check our bank accounts often so as to keep sufficient funds in it and in case of being indebted to banks without awareness.

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