If you have an unfortunate history of racking up overdraft fees and you live anywhere near a Huntington National Bank, you may want to open an account there.
Last week, the bank, which has locations in Ohio, Indiana, Michigan, West Virginia, Kentucky and Pennsylvania, announced a new policy on overdraft fees. It's called 24-Hour Grace. The 24-hours is the period from midnight of the day the checks and deposits are processed to midnight of the following day.
Here's how it works: Say you wind up going into the negative on your bank account on a Tuesday evening. Under the bank's new policy, you have until the close of business on Wednesday to replenish your funds and make things right. Or -- and this is the far more common scenario -- if you wake up on a Wednesday morning, dutifully check your bank balance and discover that you're in the negative by, say $32, and you need to get $32.01 into your account by the end of that work day to avoid any overdraft fees. If you fail to do so, then an overdraft fee will kick in: $23 for a first-time occurrence and $37.50 for future overdrafts. By the fall and spring, Huntington will be able to send out email and text alerts in real time, letting customers know that they're overdrawn.
Having had more than my fair share of experience with overdraft fees (regular readers of WalletPop may be familiar with my somewhat checkered financial past), I was amazed to hear of a bank that actually wanted to work with its customers to help them out.
I was so intrigued by this friendly new policy, I got in touch with Dave Schamer, the bank's director of deposits.
"We were doing a lot of research on overdraft fees," Schamer said. "It's a very painful fee, and we wanted to see if there was a way we could help people fix the problem in a way that other banks couldn't. One of the people in our focus group [told us] that he understood an overdraft fee meant that he'd made a mistake. And he asked us, 'Could you just give me a chance? I want a chance to fix it.' And we thought, 'Oh, that's interesting. Consumers just want a chance to make things right before they suddenly owe the bank $200." And that's when the idea of offering a grace period was born.
The idea quickly gained traction throughout the bank, says Schamer. "I know this might sound corny, but from the very beginning, when we started looking at revamping our overdraft policy, management's strong intent was to do the right thing."
Even if that means, as Huntington Bank told The Wall Street Journal, that the policy -- as well as overdraft policies put into place earlier this year -- will cause the bank to lose $24 million in potential fees next year. That's right: The policy is actually going to cost the bank money. And the bank, says Schamer, has no plans to get rid of its free checking, as many banks are doing or are threatening to do, in order to make up for the shortfall.
Needless to say, I'm rather incredulous. Here's a bank that appears to understand that it's not good business to nickel and dime your customers to death. It is a bank that gives you a fighting chance to correct a mistake; a bank that actually seems to care about its customers.
And while I haven't had any overdraft fees in over a year, there is a Huntington Bank about a block away from the bank I use. If there were something that could pull me away from my bank, this is the type of policy that just might do it.
Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
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