Student's Savings Account Hammered by Excessive Bank Fees

Albany, NYA college student from Loudonville was recently dismayed to find that she owed bank overdraft fees on a small savings account she had maintained as a child.

A recent story from the Advocate, reprinted on 7/18/10 in the Times-Union of Albany, reports that Devon Donovan was a young teenager when she and her mother opened a small savings account with Citizen's Bank. Over the years, Donovan used the account to house money earned from summer work as a lifeguard and a babysitter, as well as cash gifts from relatives from birthdays, Christmases and graduation.

Donovan was saving for a trip to Europe, but apart from that she used the account rarely She did not possess checks or an ATM card.

When Donovan went off to college, she used other bank accounts and left the savings account untouched. Monthly statements sent to her parent's home went unopened. It was estimated that the account might have had a balance of a couple of hundred dollars, but no less than $100.

Donovan and her parents thought that money would just sit there safely in the account. However, the 20-year-old had somehow missed a subtle notification from November 21, 2006, stating that the bank intended in 2007 to start charging a monthly $5 maintenance fee for any account containing a balance less than $500.

The bank later confirmed that it had been deducting $5 since at least January 2009 until the account was reduced to zero. At that point, Citizen's Bank began charging a $6.99 daily overdraft fee. The family was shocked to receive a notice from the bank indicating Donovan owed them $52 in overdraft fees.

"I just can't believe that they could do something like that," she told the Advocate. "It's unbelievable that a kid's savings account can get converted over to something that it was never intended to be."

US Senator Charles Schumer is backing a requirement that consumers be notified in a clear and obvious manner about new fees on their accounts. Schumer is also pushing for an expansion of upcoming overdraft fee protections to deal with deficits that result from automatic payments and other transactions besides simple check and ATM card withdrawals in an effort to spare consumers from unfair and excessive overdraft fees.