One of the nice things about Fedloan is that they give you a .25% discount off the interest if you setup direct deposit. And one of the bad things about Fedloan is that if you accidentally don’t leave enough cash in your account to cover your withdrawal (like I did today), then they’ll attempt to withdraw three times, and your bank will charge you NSF fees 3 times.

I have no idea why they would try three times. If I was running a business, I’d try once and if there was a problem, I’d reach out to the customer. I’m so curious to know what results are of the three attempts. My guess is that most of the time, it’s three overdraft fees in a row before the person realizes what’s happened.

Luckily I logged in to check out what was going on with my payments and saw this madness happening before the 3rd attempt. And also luckily my bank was nice enough to refund the $70 in overdraft fees they had charged so far. And finally, I was also lucky to be working from home and be able to run to the bank during my lunch break to throw some cash in to cover the 3rd attempt which should be happening tomorrow.

Note: This incident should deserve a sister post for “If We Ran a Bank, We Wouldn’t Charge You Multiple NSF Fees for the Same Offense,” but if we ran a bank, we wouldn’t charge NSF fees in the first place. (Plus it would be a redundant blog post.)

We’d also have installed an algorithm in our system that alerted you that you don’t have enough to cover an upcoming withdrawal assuming it’s coming again based on history.

I’ve complained to the CFPB about this practice. I’m not sure if the CFPB has a system of being able to upvote a complaint, but if they do, I’ll add a link to it here.

I also made the CEO of the bank I use aware of this incident. I’m not sure what if anything he will do. Everything that happened is pretty standard bank practice. But, it’s the “Standard bank” practice part of banking I hate that makes me wish for reform so much.