Laid off in April from her job as a lease administrator, Carolyn Keane says she checks her bank account every day to make sure she has enough money to make ends meet.
This month, however, she was dismayed to find she had been charged $245 in overdraft protection fees for exceeding her balance on a Wachovia debit account when she thought she had enough to cover all but one of the payments.
"It's just gotten out of control what they do with people's money," said Keane, 50, a single mom from Pawling who is supporting a son in college. "If I could figure out how much money they've gotten from me over the past five years, you would probably fall over."
The public's frustration with excessive overdraft protection fees coupled with increased pressure from Congress last week prompted several of the nation's largest banks to revise their policies, though lawmakers continue to push for even stricter protections.
Bank of America, JPMorgan Chase, U.S. Bancorp and Wells Fargo last week announced they would reduce their overdraft fees, and let customers choose whether they want overdraft protection.
Chase and Wells Fargo, which owns Wachovia, will eliminate the fees when customers overspend their accounts by $5 or less, with Chase imposing no more than three charges per day and Wells Fargo no more than four.
Bank of America and U.S. Bancorp will end fees on accounts that are short $10 or less, with Bank of America imposing no more than four penalties per day and U.S. Bancorp no more than three.
"We continue to encourage everyone to manage their accounts and always monitor their balances, because these are the best ways to steer clear of overdrafts," said Carrie Tolstedt, head of community banking for Wells Fargo.
Cutting back on overdraft fees, however, poses the risk of huge losses for the banks.
It's expected that banks will take in $38 billion this year in overdraft and bounced-check fees, according to Moebs Services, an economic research company.
Of that amount, Moebs estimates that 90 percent will be paid by the poorest 10 percent of customers.
"It's really a double whammy for people who are having economic difficulties, overdrawing their accounts and then getting hit with these hefty fees to boot," said Gary Brown, director of Westchester County Consumer Protection.
Calling the overdraft fees "disgusting," Danny Sabol of Dobbs Ferry said he had lost entire paychecks from his part-time job as a librarian after getting hit for overspending his account by less than a few dollars at a time.
He uses his Wachovia debit card to pay for everyday items such as gas, groceries and typical household bills. One time he overspent by only 10 cents while paying for gas and was hit with a $35 overdraft fee, he said.
"If you go over by a penny, this bank hits you with a $35 fee," said Sabol, 30, who has paid more than $300 in overdraft fees in a single month. "These fees, they rack up fast. It's a shame they're doing this to people in these tough economic times."
In response to public frustration, lawmakers have stepped up their efforts to rein in excessive fees for both debit and credit cards.
The proposed Overdraft Protection Act in the House of Representatives, introduced by Rep. Carolyn Maloney, D-N.Y., calls for banks to notify customers when a transaction would result in a fee.
The bill also requires that banks post transactions in the order that they actually occur, instead of starting with the largest amount of the day - which ends up driving up fees.
Chase announced it would modify its posting order to recognize transactions as they occur. U.S. Bancorp said it would conduct a "full evaluation of customer preferences and system capabilities" regarding this issue.
Senate Banking Committee Chairman Chris Dodd, D-Conn., is working on a similar bill with Sen. Charles Schumer, D-N.Y. The Federal Reserve is also considering curbs on overdraft fees that could be finalized before the new year.
What especially hurt Keane, who says she is "living day to day" and sometimes has to borrow money just to put food on the table, is that a $900 rent check was deducted from her account before several smaller transactions, even though the smaller transactions occurred earlier in the day and would not have sent her over. Posting that large check first resulted in multiple $35 overdraft charges totaling $245.
"That's how people get further and further into the hole," said Keane, who is living on a weekly unemployment check. "I'm grateful to them that they don't return my checks, but when they're making money off of someone who only makes $310 a week, that doesn't seem fair."