Banks: "Protection" Racket?

Chris Keeley went on a shopping spree last Christmas Eve, buying $230 in gifts with his debit card. But the New York University student’s holiday mood soured a few days later when he received a notice from Pittsburgh’s PNC Bank that he had overdrawn the funds in his checking account. While PNC allowed each of his seven transactions to go through, it charged him $31 a pop — or a hefty $217 in fees for his $230 worth of purchases.

Keeley, who insists he had never requested any so-called overdraft protection on his account, says he wishes the bank had simply rejected the transactions. He would have preferred to pay with his credit card or simply put the items back on the shelf. “I can’t help but think they wanted me to keep spending money so they could collect these fees,” he fumes. “Thirty-one dollars for each purchase seems excessive.” PNC says it doesn’t discuss individual customers. The bank insists it’s doing a service by covering checks and purchases that would otherwise bounce. “It helps our customers avoid the embarrassment of having a transaction rejected,” says Dan Tuccillo, senior vice-president for product marketing at PNC. As for the fees, Tuccillo says they aren’t unreasonable “given all the free services we offer to customers. I think we offer a lot of value.” Later, the bank halved Keeley’s overdraft charges.

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