Banks add fee for overdraft protection


December 03, 1993|By David Conn | David Conn,Staff Writer

Welcome to NationsBank.

Customers of Maryland National Bank and American Security Bank, subsidiaries of the former MNC Financial Inc., would do well to look closely at a notice included in their bank statement recently.

This notice says that the two banks will begin charging $20 a year for a product known as "checking reserve line of credit," better known as overdraft protection. If a customer has insufficient funds to cover a check, the bank makes good on it by extending the customer a short-term "loan."

That service heretofore has been offered free, although customers have been charged interest on the credit until it's paid back.

Nearly every bank is looking for ways to produce more "fee income" -- as opposed to merely earning money from lending and borrowing -- so it's not surprising that NationsBank would choose to impose this fee on former MNC customers. It has charged its own customers the fee for about a year.

"Our customers know the overdraft protection service has value because it costs less annually than the fee for a single overdraft," said spokesman Daniel G. Finney.

But what has some customers irked, to put it mildly, is the way the bank is instituting the charge. It will go into effect starting Jan. 1, unless customers refuse the charge (and the overdraft protection), in writing within 25 days of receiving their latest notice.

Here's how one Baltimore resident phrased his refusal: "That you would charge such an outrageous fee is bad enough, but that you try to slide it by your clients, forcing us to reject the fee, is unconscionable and probably illegal," wrote William H. Roberts Jr.

Actually, it's not illegal, according to the state bank commissioner. And Mr. Finney of NationsBank said the company didn't want to generate bad will of another type if its customers unknowingly lost the protection and started bouncing checks all over town.

"We want to make sure that customers who have had overdraft protection and expect it continued can conveniently have that happen," he said.

"Unfortunately a lot of people don't read everything they get, and feel betrayed when it happens to them," said Bank Commissioner Margie Muller. Of course, "I think people have to take some responsibility when they handle financial transactions."

Still, she added, "I do think from a public relations point of view I would be extremely cautious about imposing new fees this early on."

Or as Mr. Roberts put it, "Losing out to Charlotte [for an NFL bid] won't make me move my accounts. . . . But I can't tolerate having my pockets picked."

Three athletes join Gray Agency team

Some companies can't resist a good sports analogy to describe their business. That temptation just became irresistible for the Gray Agency, which is the Baltimore branch of the Equitable Life Assurance Society of the U.S.

Three world-class athletes have joined its team:

* Renaldo Nehemiah, the University of Maryland graduate, former track and field world record holder, and former San Francisco 49ers wide receiver;

* Richard Chinapoo, the former All-Star indoor soccer player for the Baltimore Blast, among other teams, and

I= * Desai Williams, the former Canadian Olympic track star.

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