I recently had to pay my bank a lot of money to balance my account coz I had overdrawn. The overdrawn money itself was three times smaller than the fee which I had accumulated over a period of several transactions.
I accept that I made a mistake. But I am still dissatisfied coz of the following reasons:

i) The bank could have informed me by phone in my first transaction.
ii) The letters they posted arrived a week and a half late. (I checked the post date, and it was posted at the appropriate date.)
And the main question itself:
Why is the overdraft fee so high? Shouldn't it be at a level where it fulfills its intent of deterring the customer from overdrawing in the future rather than being a tool to generate money for the bank?

Now I have applied for the overdraft protection. But I know I did it too late.
Advice: so ppl, if u have just a little amount of money in the bank, then it never hurts to check your balance before purchasing something. Don't be lazy, just do it. The money always is less than you imagine it to be.
Apply for overdraft protection with the bank a.s.a.p.

Dear passinthru:

I feel your pain: recently I also happened to pay an overdraft fee like the way you described- being extremely lazy for not checking my account prior using my plastic automated teller card. The funny part is, I was just 2 dollar short and the penalty fees is 30 dollars. That was the joke of the month for me...!!!

Yeah having an overdraft protection or case reserve protection measure will definitey solve the problem, but sometimes (depends on the bank), linking your saving account with a checking account will save you from eternal hell. The second option, my bank represent told me only after chattering with her for like 10 minutes on a customer service line with my broken english and tongue twisting accent.

Well, at the end, lesson learned- the high overdraft fee for giving a lesson for a person like us who take every moment as a granted and let us remind, alert next time- $30 charge for not having $2 in your account and having a cell phone on a pocket for exhibition rather than using it for the right time for the right reason.

Good reminder passinthru...

Sahayatri
Junkoholic

better late than never, I guess.
i will take care of my money like my girlfriend now, that's for sure.

i'm a banker so iknow why we charge high fees...to get back on all the services that we do for you..free checking...int on deposits..lower rates on mortagages and cds...and more..plus they pay me a lot to use the internet all day so i guess they have to cover that as well

Not the bankers (poor groups have no role in deciding the rates, do they?), but the bank owners charge customers high rates of interests to amass billions of dollars of profit every year. These banks are ripping and squizzing customers luring them with attractive offers at the beginning and piling charges on various topics after the scapegoat joins the offer. I have not much to do with the banks but my plain suggestion is don't get attracted with lucrative offers to change your mortgage or whatever lender. Stick on to the bank with which you have been banking for long.
Banks and building societies are profitting more and more every year. Far more than their investment deserves. The Governments most levy huge tax to control their profits.

As for penalties on unauthorised overdraft, customers should read the terms and conditions while opening up the account and know about the possible charges before going beyond the account limit. These charges are unavoidable but if your credit rating is fine and you have been obliging the terms and conditions for long, charges for only one or two mistakes can be waived off. For this, you should politely explain with the customer advisor the reason of going over the agreed limit. If you can convince them, they can consider on reasonable grounds. But at other times, you should be careful about maintaining your account fair and square. I am not a banker but experience counts. Re Kya. LOL