You know how when you over draft on a debit card the bank slaps a bunch of fees on you? I'm sure we've all been through it where we are running close to the line and accidentally make one purchase that puts us over and suddenly we owe the bank $200. Some $30 for every little bit we go over. What I never noticed, but learned from this New York Times article is that the banks intentionally run your purchases each day in order of size, with the intention of maximizing the fees from any overdrafts. I'd noticed that my purchases seemed to show up out of order on my account, but I'd never noticed that they were ordered perfect by size and day, biggest to smallest. I'd always figured it was just a matter of different systems with different speeds. No, it's the banks trying to make you over draft so they can hit you with the maximum fee possible. they figure if they run the biggest stuff first you'll go over earlier and then all the little stuff each gets a fee. So rather than running all the stuff in order, and then having that big thing put you over and paying one fee, you end up $200 in debt to the bank when you really only went $2 over on one purchase.
I'm glad people are talking about making this illegal, because that's just down right slimy. Can we just do away with the whole banking industry? And apparently credit unions are just as guilty of this! Posted by msquared (Member # 4484) on :
Ok lets try this.
In a day the bank gets charges to your account for $10, $20, $30 and $600. The $600 is your house payment.
They make the withdrawls in order recived, which is the order above. You only have $620 in your account.
The first three small ones get paid but your house payment bounces. Now your mortage is in default, maybe, and you get charged a return check fee or an NSF charge from your mortgage company. But the $10 lunch got paid.
My brother worked in a bank years ago that did the charges the way you want. And guess what? People were pissed off that the bank did not pay the large, important fee first.
Sometimes, the bank is in a no win situation.
msquared
Posted by katharina (Member # 827) on :
Yep.
Bank of America will indeed let you opt out, but you have to ask and then insist and then get angry and finally they will let you.
Bank of America sucks.
---
mssquared, your scenario does not take into account the practice of charging upwards of $30 for an overdraft.
With that, all the charges would be processed in order, and the last would incur an overcharge fee but be sent through.
You changed two variables, not one, from the complaint. If you had changed only the variable that was being complained about, your scenario would have been fine.
[ September 09, 2009, 09:56 AM: Message edited by: katharina ]
Posted by Alcon (Member # 6645) on :
Yeah, send the big payment through and charge me an overdraft fee for it, or stop payments when I run out of cash and send the big ones through first. Don't do the big ones first and then charge me $30 for every little bit I over draft. That's the way in which they are being extraordinarily slimy. And they don't let you opt out unless you fight them tooth and nail.
Posted by scholarette (Member # 11540) on :
What really annoyed me was the few times I went over, I would look and see that my check that bounced was processed at like 8:00am, and the deposit (my paycheck so I couldn't have gotten it any earlier) that I made to my account to make sure that my other check would not bounce was processed at like 5:00pm. I thought that was extremely slimy of the bank. I know I shouldn't have cut things that close, but still, that really upset me.
Posted by PSI Teleport (Member # 5545) on :
I've never had the problem you speak of, scholarette. Every bank/credit union I've been with in the last ten years, BofA, Davis-Monthan Credit Union, Wachovia and Wells Fargo, have always put the deposits through first. Even if I overdraft at 10 a.m., as long as a deposit goes in by 5 p.m., I'm good.
Posted by King of Men (Member # 6684) on :
This happened to our joint account last week - we had a bit of a miscommunication on how much money was in it, and made some purchases that weren't covered. Three separate ones, in fact. Total overdraft, 30 dollars; total fees, 97 dollars. So we went to the bank and complained, pointing out that we had put money in the account as soon as we became aware of the problem, and that three overdraft fees in one day seemed a little excessive, and anyway, hadn't we set up a reserve line some time ago for precisely this purpose? So they cancelled the fees, and set up the reserve line. All very civilised!
Posted by scholarette (Member # 11540) on :
PSI Teleport- I am glad that this is not a standard practice. I switched banks after that and with my current account, I have a reserve line, so, thankfully not a problem now. That and we don't live paycheck to paycheck anymore.
Posted by Farmgirl (Member # 5567) on :
Overdraft Protection. Learn it.
Posted by fugu13 (Member # 2859) on :
Yeah, the reserve line isn't a bad idea. A lot of banks are happy to set up lines of credit for long-time customers, and if that can be set up to automatically cover overdrafts, that would be far preferable.
Posted by DSH (Member # 741) on :
Overdraft protection = line of credit (with associated fees and interest) Understand it!
And for those few banks that will draw from your savings, they almost always charge a fee to do so. (come on folks... if they can, they will; it's all about making money)
Posted by fugu13 (Member # 2859) on :
Overdraft protection isn't really a line of credit in the same sense. Indeed, it isn't one legally, I suspect (the fee level would be too high). A line of credit from a bank is generally almost no-fee, with reasonable short-term interest rates. That is what I was talking about.
Posted by The Rabbit (Member # 671) on :
quote:m sure we've all been through it where we are running close to the line and accidentally make one purchase that puts us over and suddenly we owe the bank $200. Some $30 for every little bit we go over.
I've never had that problem. I've had one overdraft in the 30 years that I've had a checking account. On that occasion, my credit union called me to inform me about the problem and let me transfer money to the account before they charged me or bounced the check.
quote:Overdraft Protection. Learn it.
Excellent advice. As a warning though, I learned on the one overdraft occasion I mentioned above that if you have one transaction that goes over your balance by $1, they don't just bill the $1 to the overdraft and take the rest from your account. The entire transaction is billed to the line of credit.
So imagine you have $620 in your account and a $500 line of credit, and you make charges of $10, $20, $30 and $600 on the same day. You think you are just fine because the total of your charges is less than the sum of the balance in your account and your line of credit. But if the bank process the small bills first, there won't be enough in either the account or the line of credit to cover the $600 check and since the bank won't split it between the two, the check will bounce. If they run the $600 charge first, you'll be just fine.
Posted by The Rabbit (Member # 671) on :
quote:And for those few banks that will draw from your savings, they almost always charge a fee to do so. (come on folks... if they can, they will; it's all about making money)
That's why I prefer credit unions. They rarely charge for that kind of service.
quote:Overdraft protection = line of credit (with associated fees and interest) Understand it!
While I do have to pay interest on anything I charge to my line of credit, I've never paid any fees for the service. Like I said, Credit Unions rock.
Posted by The Rabbit (Member # 671) on :
quote:Originally posted by fugu13: Overdraft protection isn't really a line of credit in the same sense. Indeed, it isn't one legally, I suspect (the fee level would be too high). A line of credit from a bank is generally almost no-fee, with reasonable short-term interest rates. That is what I was talking about.
Umm, how is overdraft protection different? Mine has no fees and very reasonable short-term interest rates. If there isn't enough money in my account to cover a charge, it automatically goes to my line of credit. No fees, no problems, but I do have to pay interest on the debt.
Posted by fugu13 (Member # 2859) on :
The fees people are describing are more typical for overdraft protection. I am glad you have had a positive experience.
Posted by katharina (Member # 827) on :
America First Credit Union has a line of credit attached to the checking account and you don't get charged if you use it.
I miss America First (it's out West, definitely in Utah). It was excellent.
Posted by PSI Teleport (Member # 5545) on :
I would never get overdraft protection. I have a hard enough time leaving my savings alone.
Of course, I never overdraft anymore, either. But it would be tempting if I knew it would pull from savings. Yuck, I'm getting the shivers just thinking about it.
Posted by Alcon (Member # 6645) on :
I haven't over drafted since I was in college - but I had some trouble with Bank of America and overdrafts when I was in college. Mostly because I had so little money that overdrafting was a risk pretty much constantly. I was usually able to argue the fee away - as even when I did overdraft it was usually a situation such as a check I'd put in taking days to clear. Still, the fact that the banks purposefully set it up so that you do overdraft more easily and more damagingly is infuriating. And it's the local managers who'll cut you some slack - but the article even says that the banks are removing that power from the local managers.
Posted by The Rabbit (Member # 671) on :
quote:I would never get overdraft protection. I have a hard enough time leaving my savings alone.
When I got my first checking account, most stores in Utah wouldn't accept a check unless you had a "check guarantee card" and you had to have overdraft protection to get the guarantee card. Back then, lots of places (like grocery stores) didn't take credit cards so your options were to get overdraft protection or use cash. It was also harder to get a credit card back then.
Do you have a credit card? Do you have a hard time running up big debts on it? Overdraft protection isn't really any different. In fact, in many ways its a lot simpler.
Posted by The Rabbit (Member # 671) on :
quote:Of course, I never overdraft anymore, either. But it would be tempting if I knew it would pull from savings. Yuck, I'm getting the shivers just thinking about it.
The banks I'm familiar with that offer over draft protection, pull the money from a line of credit not from your savings. If I could persuade my bank to pull overdrafts directly out of my Money Fund without a fee, it would be great. I could run a zero balance in the checking account and keep it all in the money fund where it earns more interest.
Posted by The Rabbit (Member # 671) on :
quote:Originally posted by katharina: America First Credit Union has a line of credit attached to the checking account and you don't get charged if you use it.
I miss America First (it's out West, definitely in Utah). It was excellent.
Why did you leave? Who cares if the Bank is hundreds of miles away, how often do you go into a brick and mortar bank any way. I've always done the majority of my banking in Utah Credit Unions. They offer me a better deal than anywhere else. I can get my checks automatically deposited there from anywhere in the US, wire money there from anywhere in the world. I can use my checks from there from anywhere in the US. As long as my address on the checks is local, no one cares that the bank is out of state. I can use my credit and debit cards from Utah Credit Unions anywhere in the world.
Why would I bank anywhere else? The stamps and long distance phone calls I make a few times a year cost far far less than the fees I'd get charged by other banks. And like I said, the number of times I need a brick and mortar bank are vanishingly small.
Posted by katharina (Member # 827) on :
Deposits. I don't need a brick and mortar branch, but I deposit checks and cash often enough that I don't want to mail it in.
Posted by MrSquicky (Member # 1802) on :
My credit union will, for no fee, transfer money from my savings to checking to cover anything over the funds in it and has overdraft protection for free if I get the money into them within (I think, I've never used it) 3 days.
With the combo of better service at a local credit union and better interest rates at online banks, I don't know why people use regular banks at all.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by msquared: My brother worked in a bank years ago that did the charges the way you want. And guess what? People were pissed off that the bank did not pay the large, important fee first.
Sometimes, the bank is in a no win situation.
msquared
Yeah well, if I was throwing feces in people's faces, and skipped a few people, there's a better than even chance someone might complain in that great country of ours. Doesn't make it right to do it this way, and we all know why they do it this way, so don't give me that "damned if you do" nonsense.
Posted by Kwea (Member # 2199) on :
Even if it is true.
Posted by PSI Teleport (Member # 5545) on :
@Rabbit: No, I don't have a credit card. We haven't used them since we totally blew our credit eight years ago. We spent about six years cleaning it up (paid off $14,000 dollars on a salary of about $25,000) and I've been terrified of credit/spending ever since.
@Kwea: It's NOT true. It may have been true years ago, but most banks now, if you're paying with a debit card, will pay everything that comes through regardless of what order it's in. And then charge you out the wazoo. The mortgage would have been paid no matter what.
Posted by Jhai (Member # 5633) on :
I don't get these complaints at all, frankly.
You guys are angry because you're trying to buy things that you don't actually have the money to buy, and then the bank charges you a fee because it's forced to shell out its money to cover your ass?
Why don't you just, uh, not spend money you don't have? Pay for all smaller expenses with cash. Or charge 'em to a credit card that you pay off in full every month.
Posted by Alcon (Member # 6645) on :
quote:I don't get these complaints at all, frankly.
You guys are angry because you're trying to buy things that you don't actually have the money to buy, and then the bank charges you a fee because it's forced to shell out its money to cover your ass?
Why don't you just, uh, not spend money you don't have? Pay for all smaller expenses with cash. Or charge 'em to a credit card that you pay off in full every month.
It's not that they have to shell out money to cover your ass. They don't. They could just reject the transaction. And that's what people would prefer they do. It's embarrassing, but better that than hundreds of dollars of fees. And the banks refuse to do it. Better yet, they don't tell anyone that they won't do it or that they will charge a fee. They just charge the fee. And they set it up so that they run your purchases not in the chronological order you make them in, but in the order that will give them the highest amount of overdraft fee.
Posted by Raymond Arnold (Member # 11712) on :
Yeah, I actually complained to my bank that they forced me to include overdrafting in the first place. I want to know when I run out of money - I'd much rather have a card that says "nope, can't do that right now." It's not that I'm trying to buy stuff I shouldn't, just that I sometimes lose track of when I'm about to run out.
Posted by rivka (Member # 4859) on :
Jhai, I take it you have never had a direct deposit payment show up late? Of course, both the involved banks claim it's not their fault.
And mine only waived one of the three overdraft fees, even though the total overdraft was small, and had the withdrawals been made smallest to largest, there would only have been a single overdraft (and a small one at that).
This is only one of the reasons I am strongly considering switching banks. I have been most unhappy with WAMU becoming Chase.
[ September 09, 2009, 05:27 PM: Message edited by: rivka ]
Posted by theamazeeaz (Member # 6970) on :
quote:Originally posted by PSI Teleport: I would never get overdraft protection. I have a hard enough time leaving my savings alone.
Of course, I never overdraft anymore, either. But it would be tempting if I knew it would pull from savings. Yuck, I'm getting the shivers just thinking about it.
The point of overdraft protection isn't to give you permission to overdraft. It's just cheaper than overdrafting.
Posted by Jhai (Member # 5633) on :
rivka, we rarely use our debit cards, so if a direct deposit payment were to show up late (I've never noticed one way or another), it wouldn't matter. Everything goes on credit, and we pay off the credit cards in full at mid-cycle when we know there will be another paycheck before any of our big-ticket automated payments (mortgage, car payments, etc) are due.
There are plenty of banks that let you opt out of the overdraft protection - and with online banks today, it's not like one can complain that none of the local banks allow you to do that. Heck, with USAA Bank allowing you to deposit checks by taking a picture of 'em on your iPhone, online banks are becoming much easier to use than traditional ones. We do everything through eTrade now & it's pretty awesome. (Full disclosure: my husband works there as a product manager, so we get a lot of perks that are probably not available unless you have boatloads of cash to invest with them.)
Posted by rivka (Member # 4859) on :
quote:Originally posted by Jhai: rivka, we rarely use our debit cards, so if a direct deposit payment were to show up late (I've never noticed one way or another), it wouldn't matter.
How nice for you. My landlord does not take credit cards, and neither do any of my kids' schools.
It is clear that you have a great deal of disposable income, which is very cool. But it is not the case for most people. A bit more sympathy for those who are only barely living within their means might be nice.
Posted by AvidReader (Member # 6007) on :
quote:Originally posted by Raymond Arnold: Yeah, I actually complained to my bank that they forced me to include overdrafting in the first place. I want to know when I run out of money - I'd much rather have a card that says "nope, can't do that right now." It's not that I'm trying to buy stuff I shouldn't, just that I sometimes lose track of when I'm about to run out.
I do card stuff these days, so let me see if I can untangle it any.
You go to the store and swipe your card. The store keep the information on file for a time and sends it to their processor. At Walmart, it's pretty near instantaneous. At the college food court, I once had it in batch for six months.
After the store batches its information, it sends it to your financial institution's processor. Again, this could be near instantaneous or take a couple days.
Then the processor sends the information to your institution who debits your account.
So if you swipe your card on Monday at a slow processing store, they might not have their charge hit until Thursday. So any time you swipe your card Tuesday and Wednesday, your account may still have the money available.
Until everyone posts in real time and no system ever goes down, there's just no way to guarantee on our end that your charge won't overdraft. We just can't do that for you, much as we'd like to. (You have no idea how much simpler our jobs would be if we never had to figure out what was holding when your charges started hitting. Trust me, it's pretty bad for us, too.)
Posted by katharina (Member # 827) on :
Yeah, rivka, clearly this is your problem for not having enough money in your checking to take care of a rent check or two without worrying about if a deposit cleared.
People! Stop not having lots of extra money! This is your fault! Posted by Raymond Arnold (Member # 11712) on :
That's what they told me (I couldn't really tell whether it was a valid reason at the time but I'll take your word for it). But they didn't make any effort to warn me in advance, and I assumed that since credit cards can decline, debit cards could too.
(This is addressed to Avid, not Katherina, in case it was unclear)
Posted by AvidReader (Member # 6007) on :
The card will decline when it knows there isn't any money. But when you run out and when it knows you've run out can be two different times.
Then, the next day I get to go through the rejects and see if anything posted wrong and give and take money. And sometimes weeks later, I get an assortment of corrections in the mail to process. Charges that never went through. Charges that double posted. When it comes to cards, your account is probably a bit more fluid than most people realize.
Posted by The Rabbit (Member # 671) on :
quote:Originally posted by rivka:
quote:Originally posted by Jhai: rivka, we rarely use our debit cards, so if a direct deposit payment were to show up late (I've never noticed one way or another), it wouldn't matter.
How nice for you. My landlord does not take credit cards, and neither do any of my kids' schools.
It is clear that you have a great deal of disposable income, which is very cool. But it is not the case for most people. A bit more sympathy for those who are only barely living within their means might be nice.
I hear you rivka. I'm lucky haven't had to live from pay check to pay check but I know alot of people who do. And its rarely because they are poor money managers. Most commonly its because they have children and modest incomes. Having to wait for pay day to be able to buy groceries can be rough when it means there is no milk for the kids for breakfast. I understand why people push the boundaries and hope that their payroll deposit will be credited before a check clears.
Overdraft fees are just one more way that the banking system sticks it to the people who can least afford it.
If you have bunches of money and good credit, banks will give you free checking with interest (although the interest is nearly zero these days) and free over draft protection and credit cards with no fees. If you are poor enough to actually need those things, they charge you for them up the wazzoo.
And that doesn't even include the people who are too poor to get a bank account at all and have to pay to someone to even get their checks cashed. Its obscene.
Posted by Jhai (Member # 5633) on :
quote:Originally posted by rivka:
quote:Originally posted by Jhai: rivka, we rarely use our debit cards, so if a direct deposit payment were to show up late (I've never noticed one way or another), it wouldn't matter.
How nice for you. My landlord does not take credit cards, and neither do any of my kids' schools.
It is clear that you have a great deal of disposable income, which is very cool. But it is not the case for most people. A bit more sympathy for those who are only barely living within their means might be nice.
Uh, did you miss the part of my post (i.e. the NEXT sentence) where I described how we pay all of our large, regular costs via automated direct deposit? Like our mortgage, car payments, HOA fees, etc. And that we balance our credit card payments so they get paid mid-cycle (i.e. two weeks after) our big deductions, so that there's always a paycheck coming in between everything?
It's not about having disposable income - we don't have that much disposable income (altho we do have a lot more than we did a few years ago, when I had to forgo health insurance b/c it was too expensive out-of-pocket). It's about managing your money well. If you're regularly overdrafting from your account you're either living beyond your means, or you need to save for a few months in order to build up a cushion of money - and then don't touch that cushion. That was our major finance priority as soon as we got past the no-money-for-health-insurance-stage. It meant crappy living conditions (by my standards) for about six months, but that short term pain was worth the peace of mind in the long run for us.
As an aside, as most of you know, my husband grew up in India on the edge between poverty and middle class. Except for the truly destitute and homeless, I doubt any Americans live at the standards his family did. After hearing from his mother about the lengths the family went to in order to save enough money to pay for educational expenses - like airfare for Abhi's trip from India to the US for college - frankly, I have a lot less sympathy for Americans bitching about how they don't have enough money.
Edit: to make it clear, I'm not trying to make this into a "I'm-more-disadvantaged" competition in any way - I just think that it's important to recognize how wealthy the vast majority of us Americans are. Most of what we consume - from the size of our housing to the mode of transportation used to the public goods (parks & libraries) available to the composition of our meals - are luxuries. If you can afford them, great!
However, if you're currently finding it hard to make ends meet, cutting meat consumption down to once or twice a month, not eating out, only consuming free entertainment, living in a smaller space with just basic furniture, going without television, internet, cell phones, etc, are all possible ways to reduce your costs - those are some examples of what Abhi & I did to get that cushion of money that I discussed above just a couple of years ago.
[ September 09, 2009, 07:56 PM: Message edited by: Jhai ]
Posted by rivka (Member # 4859) on :
quote:Originally posted by Jhai: If you're regularly overdrafting from your account
I'm not sure anyone said this was happening to them regularly. I certainly didn't. The recent incident was (IIRC) the first time in several years. I think 4 or 5, but I'd have to check.
And considering that my finances are extremely strained right now, the extra $70 or so in fees was fairly painful.
quote:Uh, did you miss the part of my post (i.e. the NEXT sentence) where I described how we pay all of our large, regular costs via automated direct deposit?
It was three automated payments that caused my problem.
Posted by andi330 (Member # 8572) on :
The only recent overdraft I had wasn't my fault. I'm an online student, paid for courtesy of my employer, but even though they pay up front (I don't get reimbursed) University of Phoenix required me to give them a credit card as backup. For my very first class, despite the fact that I had submitted all the pertinent paperwork to them, they're system screwed up and charged by bank debit card (the only card I had to give them) more than $1500 for the class. I don't have an extra $1500 laying around in my checking account. I also didn't know that it had happened (as they sent me no payment notice) until I checked my bank's website to ensure that my paycheck had been deposited. I then realized that I was several hundred dollars in the hole, and it was only going to get worse because even though I had no money in the account, my debit card had let me keep spending.
Thankfully, Wachovia returned all those fees to me (otherwise I'd have had to battle it out with UPox, and despite it being their fault, they might not have given it to me) upon the refund of the money. Of course, it took UPox several days to reverse the payment since it happened on a Friday, so I had literally no money for several days.
Posted by Farmgirl (Member # 5567) on :
quote:Originally posted by DSH: Overdraft protection = line of credit (with associated fees and interest) Understand it!
And for those few banks that will draw from your savings, they almost always charge a fee to do so. (come on folks... if they can, they will; it's all about making money)
The fees with drawing from Savings (for me, it is $8 to auto transfer from savings to my checking if I get into overdraft territory), is FAR LESS than the cost of an overdraft, or the cost some vendors would charge you if you bank refused to pay your check and it bounced back to them. Usually $30.
I feel that is a small price to pay for what I feel is my own mistake for letting my balance get so low that it can't take all that I have charged against it. It's all about accountability. If you can't cover all you've charged, no matter what order they hit then something shouldn't have been charged.
I had horrible trouble with overdrafts for years, so it isn't like I haven't "been there, done that" but I finally took responsibility for it and learned. But use overdraft protection for those times I'm forgetful. $8 for a transfer is great for my peace of mind.
Posted by andi330 (Member # 8572) on :
Banks are really irresponsible about things like this. Or perhaps slimy is a better word.
For example, when I opened a recent savings account I asked the representative not to link it to my debit card. I wanted to make it harder for me to get money out of the account so that I would be more likely to save. I did this fairly early in the process only to be told it was "too late." Luckily I was able to make her not link it to my bank account as part of overdraft protection. I did that once before, only to realize that I never saved anything and spent more than I should have been because I knew that money would just transfer over, and at the time there was only something like a $3 fee.
Also, to increase all the slimyness that is out there, in the above I post I talked about my most recent (not my fault) overdraft experience, and while I do credit Wachovia for refunding all the fees since it was an unauthorized and incorrect charge that caused them in the first place, one of the fees was really slimy.
You see, as an ongoing effort to save money I have a Way to Save account. That's one of those savings accounts where Wachovia moves a dollar from my checking to my savings for every purchase that I make. I'm sure you can see where I'm going. Even though there was no money in my checking account to move, Wachovia made the regular end of day transfer from checking to savings (something like $7 for the day) and yes, there was an overdraft fee. Also their fee is not a set amount. It increases for each additional fee you incur.
Posted by ambyr (Member # 7616) on :
quote:Originally posted by fugu13: Overdraft protection isn't really a line of credit in the same sense. Indeed, it isn't one legally, I suspect (the fee level would be too high). A line of credit from a bank is generally almost no-fee, with reasonable short-term interest rates. That is what I was talking about.
It is a line of credit in the sense that it shows up on your credit report and factors into your credit score. As someone who's never had a credit card or taken out any sort of loan, and thus is accustomed to having a completely blank credit report and a credit score of ???, I was rather surprised to pull a credit report a couple years ago and find it list a $1,000 line of credit as available to me from a bank I had overdrafted on years before.
I had in fact closed all accounts with the bank in question immediately after the overdraft*, but my credit report maintained the line was still open. Based on the line of credit created by that one overdrafted check, the credit bureau deigned to award me the first credit score I've ever had--a rather solid, mid-700s one. Thus is financial mismanagement rewarded, I guess. (The overdraft line eventually closed, and now I'm back to not having a credit score. Oh well.)
*The overdraft was caused by my ex-boyfriend cashing a six month old check--which I had been under the impression he had shredded and thrown out--on the day I was trying to close the account. The bank decided to process the check between me pulling all my money out of the account and the account actually closing. Annoying, but easily fixed.
Posted by Farmgirl (Member # 5567) on :
[edit - this was to andi, because ambyr posted before I finished typing this] I'm still not seeing how that is the bank's fault. It's an automated system that you signed up for (the Way to Save). Obviously that program doesn't work that well for you since your account can get very low. How is the computer supposed to know? There are millons of bank customers. Banks can't take a look at each one and say "oh, say, this is an automated transfer and he/she doesn't have any money right now" and override or waive it at that point. Many banks, though, are happy to work with you to alleviate some fees when you talk with them (as you also described in their helping you with the recent experience overdraft incident which was not your fault.
Posted by andi330 (Member # 8572) on :
That's the point. I don't overdraft. Read the post again. This was an incorrect charge by the University which caused the overdraft. Just because I don't have $1500 laying around extra to donate to someone who can't run their machines properly doesn't mean I'm irresponsible with my money. I take those transfers into account. But especially when it is a transfer of money from one account to the other the bank should have an automated override. After all, there's no overdraft protection on my savings account. If I had a transfer scheduled from savings to checking and there wasn't enough there to cover it, it wouldn't go through. Why should the checking account work differently just because there's overdraft protection? This wasn't a charge that I put on my card at the store it was their system moving money from one account to the other. And it was a part of the related incident in my earlier post. There was clearly no money in my account. And believe me, their computer is intelligent enough to see that and stop the transfer if it is intelligent enough to see that I'm overdrawn and charge me the fee.
Posted by The Rabbit (Member # 671) on :
quote:nd believe me, their computer is intelligent enough to see that and stop the transfer if it is intelligent enough to see that I'm overdrawn and charge me the fee.
You're wrong. Computers aren't intelligent at all. They are machines that are capable solely of following a list of instructions. Unlike people, they don't see anything they aren't told to look at and they can't exercise initiative if something goes wrong. If the function that moves money from one account to the another isn't programmed to check the balance of the account first, that program has no more knowledge of the account balance than the University of Pheonix program that made the incorrect charge.
Now you can argue that the people who designed this program should have foreseen the possibility that that the "Way to Save" program might try to transfer money out of an overdrawn account and should therefore have built in a safety against this happening. Unfortunately, people never foresee all possible ways an automated system can go wrong until its in use. That's why banks still need human employees with the authority to override the automation when problems are identified. But that means someone, almost always the customer, has to identify the problem. If a human bank employee had to check every automated transaction it would pretty well negate the point of automation in the first place. It sounds to me like that system worked in your case.
If this pops up as a common problem with the "Way to Save" system and bank employees are routinely needed to override the charges, that's a different issue. If this is a very common problem and the bank hasn't moved to program the system to avoid it, they may indeed be banking (pun intended) on the fact that many customers won't check the charges and demand that they are fixed. But I kind of doubt that's happening. I suspect that people who sign up for the "Way to Save" aren't people who commonly overdraw their accounts and while occasionally a problem like yours occur, they are likely rather unusual.
Oh, and for the time being, I'd really rather the level of "artificial intelligence" given to banking computers be very near zero. My experience with AI is that would be better named AS (artificial stupidity). I don't want bank computers second guessing what I want done with my money.
Posted by katharina (Member # 827) on :
Bank of America has a similar program, and the transfer is cancelled if there isn't enough money in the account to cover it.
Posted by scholarette (Member # 11540) on :
I think it is rather sad that so many people's response to the banks doing something which is pretty slimy is to say well, the people deserved it. If people were complaining about the existence of an overdraft charge, the response that people shouldn't overdraft would be more appropriate, but the complaint was that the banks are finding ways to hit people repeatedly for what should be one fine. Even if we accept the premise that all people who overdraw are irresponsible, does that excuse the banks from predatory behavior? Finding every possible way to take advantage of someone is still wrong, even if someone has made preventable mistakes.
Posted by Farmgirl (Member # 5567) on :
Guess that depends on your interpretation of "predatory behavior". I don't consider this to fall under my interpretation of that. It is not fraudulent.
I think if they are just charging standard fees (for known services, and these fees are presented to you up front in your documentation when you open an account) then you have the options of "not banking" with them, because they have already told you of their policies.
They do have to do business, and fees are part of their business and profit margin. Interest margins right now are so low that banks are only making break-even by using their fees-for-services.
I'm not saying that is right or wrong - I'm simply saying that is standard practice, it is PRINTED in your notifications when you open your accounts, so ultimately it is your choice (whether or not to bank there).
Posted by Jhai (Member # 5633) on :
I'm with Farmgirl here - I see it as akin to the massive fees you can get hit with if you aren't careful when returning a rental car. Everything is right there in the agreement you signed, and there is enough competition in the market (and other options) that it's your own fault if you get dinged. If you don't like the service offered by your particular bank, vote with your feet.
Regarding those who get overdrafts due to something outside their control - yeah, sometimes life's unfair & that sucks. Our new car was recently in the shop for three months because an idiot without insurance hit it. We had to pay the premium that goes along with our insurance policy. Should I be angry at Geico for not waiving their standard fee (which we agreed to) just because it wasn't our fault that our car was hit?
Posted by katharina (Member # 827) on :
I don't think it is a coincidence that both of you either work for a bank or has a spouse that works for a bank.
Posted by scholarette (Member # 11540) on :
Where in the printed notices does it say that they will rearrange my purchases in order to maximize the fees? If it was just the one overdraft fee, I would agree. That is something that you are aware of upfront and does not come as a surprise. But the fact that they process my purchases in order from largest to smallest is not something I was ever made aware of.
Posted by Jhai (Member # 5633) on :
*shrug* He's been working at a eTrade for less than a year (and banking isn't their main business anyways). Before that it was online advertising. Before that online backup. Before that the airline industry. Next up will probably be some sort of social networking. The work is the same throughout - just the specifics of what type of products he's managing changes through job hops.
My belief that you should take personal responsibility for your financial decision predates meeting Abhi, nevermind predating his job at eTrade.
Posted by katharina (Member # 827) on :
If you think people are complaining about personal responsibility, you haven't read the thread. Try reading it again.
Posted by The Rabbit (Member # 671) on :
quote:Where in the printed notices does it say that they will rearrange my purchases in order to maximize the fees? If it was just the one overdraft fee, I would agree. That is something that you are aware of upfront and does not come as a surprise. But the fact that they process my purchases in order from largest to smallest is not something I was ever made aware of.
This is certainly something customers should be told. I should however note that several reasons have been given here for why banks do it that way which have nothing to do with maximizing overdraft charges. Given that there are other valid reasons for doing this, it is no fair to presume banks do it solely or even primarily to maximize overdraft charges. It is extremely likely that this is an artifact of an automated process that was implemented for other valid reasons.
Posted by Farmgirl (Member # 5567) on :
quote:Originally posted by katharina: I don't think it is a coincidence that both of you either work for a bank or has a spouse that works for a bank.
While the fact that I work for a bank truly does help form my opinion (I'm not going to deny that), since I don't work with the "money end" of the bank (but in tech support) really the only part of this conversation affected by my employment is that it has helped to educate me in what all goes on inside a bank, and what those fees are used for. In other words, I can truly see if from both sides now. Sure, you can accuse me of being biased because those fees help pay my wages. Fine, accuse away. But really working inside a bank has helped me to understand how the whole system works, and it is complex and extremely heavily regulated. So I don't like blanket accusations against banks when a lot of it is very honest people trying to do their best to help customers, but are not getting any credit for that.
As I said before, I used to have chronic problems with fees and overdrafts, etc. In my current position, I could actually lose my job for these types of things. But now that I have a better understanding of the system, and work within the parameters outlined, I rarely have any issues with it.
(I should also say that is probably true of each and every one of us on this forum -- we have a better understanding of our particular industry we work in, whether it be teaching, or tech, or restaurants, etc. than those who do not work in that environment, so as such, we would get upset by blanket statements that slam the entire industry.) (Not that I've ever had a reason to slam libraries, Kat) Posted by Jhai (Member # 5633) on :
quote:Originally posted by katharina: If you think people are complaining about personal responsibility, you haven't read the thread. Try reading it again.
I don't think people are complaining about personal responsibility, I think they're shirking it. If you don't like the overdraft protection your bank provides, then either take steps to never use that service or find a bank that allows you to opt out. Simple as that.
Posted by MrSquicky (Member # 1802) on :
While I agree with that, it doesn't really change the fact that banks are being pretty slimy when intentionally arranging charges against an account to maximize the number of overdrafts against it so they get more fees.
---
It's easier for me, because I've got sufficient funds, but whenever I deal with banks, I assume that they are out to screw me. I think it is important for people to realize that, by and large, banks are not on your side. They are on their own side and while that often coincides with your side or at least appearing to be on your side, they shouldn't be treated as entities to trust.
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by Alcon: You know how when you over draft on a debit card the bank slaps a bunch of fees on you? I'm sure we've all been through it where we are running close to the line and accidentally make one purchase that puts us over and suddenly we owe the bank $200. Some $30 for every little bit we go over. What I never noticed, but learned from this New York Times article is that the banks intentionally run your purchases each day in order of size, with the intention of maximizing the fees from any overdrafts. I'd noticed that my purchases seemed to show up out of order on my account, but I'd never noticed that they were ordered perfect by size and day, biggest to smallest. I'd always figured it was just a matter of different systems with different speeds. No, it's the banks trying to make you over draft so they can hit you with the maximum fee possible. they figure if they run the biggest stuff first you'll go over earlier and then all the little stuff each gets a fee. So rather than running all the stuff in order, and then having that big thing put you over and paying one fee, you end up $200 in debt to the bank when you really only went $2 over on one purchase.
I'm glad people are talking about making this illegal, because that's just down right slimy. Can we just do away with the whole banking industry? And apparently credit unions are just as guilty of this!
I'm committing the sin of having skimmed through the thread before posting. At my bank I got bitten with overdraft fees, so I went into the bank, sat down with a customer rep, told them I want my debit card to be denied rather than accepted if I ever overdraft, and now I never pay those infernal fees.
I was under the impression that the bank simply charges a fee per transaction rather than by the dollar amount.
Posted by Darth_Mauve (Member # 4709) on :
On the radio today they were talking about the growth of Pay Day Loan stores.
It seems that the state of Missouri has legally limited the APR of Pay Day Loan companies to 1047% (That is one thousand forty seven percent)
Between all the calls that were being taken about this organized thievery, many callers called in and said, "Yes, its expensive, but its cheaper than the fees you get at a bank if you go $1 over your limit."
Posted by katharina (Member # 827) on :
Like I said, Jhai, if you think that, it means you haven't actually read the thread. Try again.
Posted by Jhai (Member # 5633) on :
quote:Originally posted by MrSquicky: It's easier for me, because I've got sufficient funds, but whenever I deal with banks, I assume that they are out to screw me. I think it is important for people to realize that, by and large, banks are not on your side. They are on their own side and while that often coincides with your side or at least appearing to be on your side, they shouldn't be treated as entities to trust.
This is pretty much what I think anyone's default position should be when dealing with a for-profit company (and most non-profits), especially larger ones. The companies are there to make money, and in order to do so, they offer services or goods to you. Yes, they want to keep you as a customer, and they have certain legal requirements, but both of those constraints will only help you so much. Be proactive on your own behalf, and be aware of what you're agreeing to when contracting a service or purchasing a good.
Posted by Raymond Arnold (Member # 11712) on :
quote:I'm committing the sin of having skimmed through the thread before posting. At my bank I got bitten with overdraft fees, so I went into the bank, sat down with a customer rep, told them I want my debit card to be denied rather than accepted if I ever overdraft, and now I never pay those infernal fees.
I did the same thing, and they told me no. Various reasons why this is a necessary part of automation rather than deliberate sliminess have been discussed here, and for the most part I believe them although I'm sure that banks are at least aware of how it benefits them, and that probably gives them little incentive to improve their system.
As for finding new banks, well yeah there's probably all kinds of options out there for people with the time to research them. For the past two years I was at an intensive school, with only a bike for transport. There were only a few banks within biking distance. The one I picked didn't mention anything about the overdraft fees. It probably was mentioned among the fine print, and sure I could have read the fine print in detail and committed it all to memory but if I did that for everything I bought I'd barely have time to get anything else done. I knew credit cards could be declined, I assumed debit cards worked that way too and saw no reason to think otherwise until after the fact.
After my first overdraft I complained to the bank, they said "deal with it." I looked at another bank or two, they both had the same policies, I didn't know about online banking, so I gave up.
Posted by andi330 (Member # 8572) on :
My understanding of why the order is rearranged to have larger charges processed first (other than maximizing overdraft fees) is that years ago banks gave surveys and respondents said this is what they preferred, so that if they bounced a check, the more important (and presumably larger) charges would not bounce, only more insignificant charges. The article doesn't say when this survey was given. I am going to assume that it was given to customers at a time when overdraft protection was either non-existent or much less prevalent. When overdraft protection was not available or less available, this would make sense. However, I suspect that if the survey question was given again today, in banking system where overdraft protection is the norm, and where reordering purchases actually increases overdraft fees I suspect banks would get a much different answer.
Also, having recently learned a lot about statistics and surveys, I know that banks and other organizations can ask questions in such a way that they get the answer they want. If the survey was given recently you could still get people to answer that they want their transactions re-ordered by wording the question in such a way that it skews the answer.
Posted by Tatiana (Member # 6776) on :
I remember how shocked I was when I went off to college and first started dealing on my own with banks, landlords, a university, utility companies, roommates who owed money for phone charges, auto mechanics, grocery stores, etc. It's like there is hardly anyone who isn't out to maximize their profits at your expense, regardless of what's fair or right. Those who seem more vulnerable, the young, the ignorant, the very old, those who are sick, those who are impoverished, they are the very ones whom merchants and dealers will skin for extra dollars whenever they get a chance. It upset me a lot. I thought the world was a better place than that, that people were better than that.
But alas, they aren't. That's why one should be diligent in looking out for one's own interest in commercial transactions. Read Consumer Report. Ask around about businesses. Get references. Read policies and contracts. Understand what you're agreeing to, and insist that you get what you're entitled to. Those who don't, unfortunately, get taken advantage of. I'm sorry to have to say that, but it's almost universally true.
Posted by katharina (Member # 827) on :
Amazing how that sponsored questionaire got them the exact answer that would enable them to slap as many enormous fees on people as possible.
It's also incredible how the software has been designed to make the financial penalties as horrible as possible for the customer and as beneficial as possible for the bank.
Posted by King of Men (Member # 6684) on :
It's worth noting that if banks didn't get money from this sort of thing, they'd have two options: Either dispense with checking accounts altogether, or else charge a yearly flat fee for having an ATM card. (As a side note, the second option is common in Norway.) It's not as though they provide checking accounts from the plain goodness of their hearts, after all. In the current system they make their money from the careless and those who run their accounts close to the limit. In a different system they would make a smaller profit from everyone. Take your choice.
Posted by rivka (Member # 4859) on :
Door #2. Posted by katharina (Member # 827) on :
Definitely door #2. An honest flat rate instead of this back door extortion of those who can least afford it would definitely be preferable. And easier to shop around to get the best deal, so the most competitive.
This is total crap. This is like an airline advertising the lowest airfare and then piling on hundreds of dollars in fees they don't tell you about up front.
Posted by Farmgirl (Member # 5567) on :
Someone's been reading Hatrack and listening to your complaints!
quote:"We are doing this because we have customers under stress, and we can help a lot of them right now," said Brian Moynihan, president of consumer and small-business banking at BofA, which is based in Charlotte, N.C.
Ha! I'm positive that the legislation before Congress right now that will limit their ability to charge those outrageous fees had NOTHING to do with it, and if the major banks recieving government aid continue to bleed their customers, they will lose the ability to set their own policy and by softening the policy now (by less, though, than what is proposed in Congress), they might head off the legislation. No, this timing is merely coincidental. Posted by AvidReader (Member # 6007) on :
Is there a bill? I figured after the Credit Card Act, they were trying to head any off.
I loved it. I got my new bill from BoA with a nice note about how in an effort to help me, they'd extended my due date. Somehow, I suspect they just didn't want to change the date they print the statements.
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