This is one of a few occasions i do not mind gov't involvement in the economy and business regulations. Current overdraft policies of many banks has gotten ridiculous because basically it is average joe versus Big Bank with 100's of Billions in capital assets.

As the SECU i get charged $0.50 but i have heard of fees at private banks as high as $30. Even further i have read in one report of banks manipulating the way transactions are handled in order to charge a "combo" overdraft fee.

For Example Let's say Bob deposits $100 into his account on Friday. After which a check bob wrote 3 weeks ago finally gets cashed for $50. Let's say Bob has $50 in his account now. Over the weekend he makes three debit card purchases in sequential order of $5.00, $12.00, and then (thinking he still has $83) a purchase of $65.

Since it is the weekend though on the following Monday when the bank processes all the stuff from the following weekend will process the largest amount of $65 FIRST, which will of course cause the account to go to overdraft. The bank will then process the next two transactions both of which will also overdraft since their was an effective $0 left in the account. So Bob will end up getting charged $75 in overdraft fees.

This is pretty ridiculous in my opinion. I know the bank is there for profit and bob knowingly signed up for service knowing the $25 fee but the combo fee is clearly abuse and the bank taking advantage of customers.

http://money.cnn.com/2008/08/12/pf/raw_deal_overdraft/index.htm?cnn=yes

8/15/2008 6:03:43 PM

Banks claim the charges are processed randomly. I believe them. Why would they lie?

8/15/2008 6:05:23 PM

Overdraft fees are pretty easily avoided.

8/15/2008 6:06:46 PM

Wachovia charges $10 a pop to use overdraft protection, a service they used to provide for free. As such, I switched banks and now overdraft use is free again, just pay the 14% annual interest which worked out to 4 cents last time I used it.

8/15/2008 6:11:10 PM

Quote :

"For Example Let's say Bob deposits $100 into his account on Friday. After which a check bob wrote 3 weeks ago finally gets cashed for $50. Let's say Bob has $50 in his account now. Over the weekend he makes three debit card purchases in sequential order of $5.00, $12.00, and then (thinking he still has $83) a purchase of $65."

Wachovia more or less did that to me.

And to make matters worse, I only overdrafted in the first place because they charged me a fee for accidentally going below $100.

I think there's room for reasonable regulation in this area.

8/15/2008 6:14:42 PM

Quote :

" For Example Let's say Bob deposits $100 into his account on Friday. After which a check bob wrote 3 weeks ago finally gets cashed for $50. Let's say Bob has $50 in his account now. Over the weekend he makes three debit card purchases in sequential order of $5.00, $12.00, and then (thinking he still has $83) a purchase of $65."

so bob should already have that check he wrote in his check book ledger, its his fault for not knowing how to balance a checking account. If Bob needs part of that $100 deposit to cover a check he wrote three weeks ago then Bob's problem is illegally writing a check 3 weeks ago for an amount that he did not have the funds for.

8/15/2008 6:19:30 PM

Well, from what I read the law would not curtail their ability to charge such fees but merely require them to make them more explicit or offer tools for customers to know they are going to get hit.

The only real fix for this problem is for people to choose their bank based on it. Afterall, everyone has free checking accounts, their handling of such fees is their sole form of price competition, so before openning a bank account find out such fees. Afterall, people tend to keep bank accounts for decades, might as well get a good one.

8/15/2008 6:20:12 PM

Quote :

"so bob should already have that check he wrote in his check book ledger, its his fault for not knowing how to balance a checking account. If Bob needs part of that $100 deposit to cover a check he wrote three weeks ago then Bob's problem is illegally writing a check 3 weeks ago for an amount that he did not have the funds for."

I probably should but i don't balance my checkbook; i usually just keep a watch on my statement balance and keep a "set" amount in to cover checks i wrote. After 2 weeks though i could see how through high activity (deposits and debits) you could lose track. Yes he deserves to get charged overdraft for not realizing he still had a $50 check outstanding; but the bank setting up their processes like this surely in the intent of maximizing profit while screwing the small guy is still fucked up.

Logically he made one overdraft but through the banks manipulation contrary to the sequence of transactions they screwed him for 2 more overdraft fees.

8/15/2008 6:39:41 PM

If you balance your checkbook, then you won't be charged overdraft fees--no matter what order the charges are processed in.

8/15/2008 6:47:48 PM

writing a check that you can't cover is illegal

8/15/2008 6:50:51 PM

Quote :

"so bob should already have that check he wrote in his check book ledger, its his fault for not knowing how to balance a checking account. If Bob needs part of that $100 deposit to cover a check he wrote three weeks ago then Bob's problem is illegally writing a check 3 weeks ago for an amount that he did not have the funds for."

you misread. looking at the original post:
$50 originally in account
+$100 deposit
-$50 check
-$17 purchases
=thinking he still has $83

[Edited on August 15, 2008 at 7:02 PM. Reason : but i agree with you in principle...people should be conscious of their own finances]

8/15/2008 6:57:27 PM

Wachovia is one of the worst offenders. It's especially bad for college students, who often get close to zero balance.

I strongly recommend you switch to a bank or credit union that isn't itching to assrape you every time you slip up.

You can also mitigate the problem by ditching the bank card and using a credit card. For the amounts most people usually fuck up on, even carrying the balance for more than a month is cheaper than these asshole bank fees.

8/15/2008 7:04:39 PM

Quote :

"If you balance your checkbook, then you won't be charged overdraft fees--no matter what order the charges are processed in."

screw it forget the outstanding check. I do not carry my ledger and check book to the bar. Let's say at 2AM on my way home being the DD i have to stop and get gas for my car. With a $40 balance i have already made $8.80 and $12.21 this weekend. I put $20 of gas in my car using my debit card. Yes i should have remember that my balance is 19.99 but imho it is neither ethical or good business that the bank is going to penalize me 3 times for over drafting when i only fucked up once.

8/15/2008 7:04:43 PM

Get a credit card and profit the cash back if you are using a debit card anyway. I make over $200 a year off my cash back and I never have to worry about overdrafting multiple times (as a credit card payment is a single instance, even if it was for over a thousand dollars) or even once as I can be check before submitting the payment. Of course, this is irrelevant, as I use a good bank that does not charge overdraft fees (the purpose of friggin' overdraft was to protect us from fees!!).

8/15/2008 7:20:57 PM

I actually had a situation where Bank of America didn't charge me for overdraft even though I did so by a few hundred dollars. It's probably because I use direct deposit and the overdraft was within my biweekly paycheck, but I was nevertheless surprised. They simply sent me a nice letter telling me I had overdrafted by X dollars and that they would cover it for me as a courtesy but please pay it back within a couple of weeks. I'm still trying to figure out what I did that a bank of all places would actually grant me a mercy...

But yeah, I try to keep some cash as a "buffer" in case the checks don't hit at the expected times.

8/15/2008 7:22:57 PM

Quote :

"you misread. looking at the original post: $50 originally in account +$100 deposit -$50 check -$17 purchases =thinking he still has $83"

no, i didn't. and that you don't understand is just an example of why so many people have problems with this, they don't know how to balance their check book. you keep a ledger and then periodically compare it to what the bank says and if there is a difference you find out why (in this case it would be a check that had not been deposited yet)

if bob had $50 in his account and an outstanding $300 check that he wrote 3 weeks ago then he fucked up. in his ledger he should have subtracted the $300 when he wrote the check and know that the money he had to spend was amount before check minus $300 (even though the website or wherever he checks his balance is $300 higher)

or bob never had the $300 in his account and needed the $100 deposit to cover it, in which case the $300 check he wrote was illegal

8/15/2008 7:23:46 PM

First Citizens Bank charges $35 and often makes the draft/debit/credit order all sorts of ridiculous, so after fighting with them over this, and many of their other ridiculous processes and fees, and the introduction of 5.01% on FREE CHECKING at Capital Bank... I now have my money with Capital Bank.

8/15/2008 7:42:04 PM

At least had it been a $300 check he would have legitimately have over drafted 3 times and not like my situation where the bank uses the "fine print" to manipulate the transaction to maximize the butt raping fees.

Quote :

"t's probably because I use direct deposit and the overdraft was within my biweekly paycheck, but I was nevertheless surprised. They simply sent me a nice letter telling me I had over drafted by X dollars and that they would cover it for me as a courtesy but please pay it back within a couple of weeks."

Speaking of not paying fees I have an American Express Card that i paid off like clock-work every time i got my bi-weekly pay check for the last year. Last month caught up with my move and not having a paycheck to "remind" me to pay AE i forgot and ended up paying my bill a week late. I was charged a 19.99 fee but called them up and they dropped it as a sign of "good faith".

8/15/2008 8:16:29 PM

^ That happened to me once and citicards refunded everything, including the interest. As a result I signed up for it to autodraft my creditcard in full on the due date.

The difference here, of course, is that physical banks do not earn very much just from the interest of what you keep in your checking and for debitcard purchases.

Meanwhile, credit card companies profit madly when you use the card and yet don't have to maintain cash machines or retail banking outlets. There is a difference in risks associated with the two businesses; CCCs being at imense risk while banks are at relatively little risk (whatever your overdraft is for).

8/15/2008 9:05:59 PM

Quote :

"no, i didn't. and that you don't understand is just an example of why so many people have problems with this, they don't know how to balance their check book. you keep a ledger and then periodically compare it to what the bank says and if there is a difference you find out why (in this case it would be a check that had not been deposited yet) if bob had $50 in his account and an outstanding $300 check that he wrote 3 weeks ago then he fucked up. in his ledger he should have subtracted the $300 when he wrote the check and know that the money he had to spend was amount before check minus $300 (even though the website or wherever he checks his balance is $300 higher)"

No no no no. What did the article say now?

http://money.cnn.com/2008/08/12/pf/raw_deal_overdraft/index.htm?cnn=yes

Quote :

"NEW YORK (CNNMoney.com) -- Terry Read transferred $400 into his wife's checking account on a Friday. Over the weekend, his wife used her debit card to make some small purchases, and on Monday she was slammed with a $35 overdraft fee because his cash transfer hadn't cleared yet. "They took my $400 out of my account immediately of course," Read said. Since both use the same bank, hitting his wife with an overdraft fee seemed "absolutely ridiculous" to him."

This is consistent with the previous stated example of:

Quote :

"$50 originally in account +$100 deposit -$50 check -$17 purchases =thinking he still has $83"

In other words, this isn't using the fine print to rearrange the debits in whatever order gets the bank the most money. This is completely disregarding the rules and rearranging all debits and credits in the mathematically most assraping configuration.

The guy is not being irresponsible by not having enough of a balance to pay off the checks. No, the guy specifically puts money into the account so that weekend purchases + uncashed checks will not bring him in the red. The bank, then maliciously investigates when each deposit into the account is made, and when each check is cashed to figure out how they can charge it so that the account will go into the red.

This is probably already against the law. Note how in the article, the $400 magically disappears from all accounts for some amount of time. To the extent that money has value over time, that is borderline theft.

8/15/2008 11:31:01 PM

^ Yeah banks still treat it like the money spends time in transit and is magically gone even for some transfers within the same bank. They basically take the money out of one account, hold onto it for a while and continue to use and earn interest on it themselves, then put it back in the other account after processing outgoing transactions from the account. During this time they treat it as though neither of you have that money for the purposes of over-drafting and going under limits. Not all banks do this luckily; those that do should be held accountable.

8/15/2008 11:43:18 PM

the appropriate legislation should be to require ALL financial institutions to process transactions in the order that they are submitted. All transactions have a date and time stamp, they should be processed in that order only. in a digital age, there should be not reason we can't have instantaneous processing of deposits, transfers, and withdrawls. Even if it isn't instantaneous, it should be processed in the correct timeline.

8/16/2008 12:12:13 AM

STATE EMPLOYEES CREDIT UNION FTMFW

$12 Bounced Check Charge

$0.50 Charge for overdraft protection (transferring from another account or a credit card to cover charges)

$0 (NO fee) for overdrawing with your debit card, account just goes negative.

$0.75 fee for non-cash points atm usage

No minimum balance on any checking account, deposits post to your account IMMEDIATELY you can make a deposit at 5:25 in the afternoon and pull it out immediately.

8/16/2008 1:21:20 AM

Quote :

"The guy is not being irresponsible by not having enough of a balance to pay off the checks. No, the guy specifically puts money into the account so that weekend purchases + uncashed checks will not bring him in the red. The bank, then maliciously investigates when each deposit into the account is made, and when each check is cashed to figure out how they can charge it so that the account will go into the red."

Honestly the guy was 'irresponsible' for not ensuring the original balance used to justify
his check was not still present thus deserves a one time
overdraft fine based on the situation. Regarless as mrfrog is 100% correct
and supports my whole rationale for posting this article in the fact
of the bank acting "malicious" in arranging the order of transactions
to maximize bank penalty charges.

Quote :

"the appropriate legislation should be to require ALL financial institutions to process transactions in the order that they are submitted. All transactions have a date and time stamp,"

you are 100% right; from my understanding this legislation has already passed
at the least from the demand side of the equation. The millenium check
act worked to make check issuances by consumers to instantly reach
the target bank to assure the necessary funds are avaliable. I remember
about hearing about such program 4 years ago when it was passed.
In reality though is in the bad economic state of the financial
industry they are happy to sneak whatever extra profits when they can.

8/16/2008 3:32:47 AM

If you don't spend money you don't have, then it doesn't matter what order the transactions are processed in.

8/16/2008 8:41:19 AM

i have one account for rent and utilities and another for other just everyday expenses because i have a credit card tied to that account

i wrote a check to cover a line-of-credit application fee to the first bank from my account at that bank

but since i only have enough to cover rent and utilities there wasnt enough

i got hit with a $30.00 fee

whose fault was that?

mine

the point is that shit happens and i didnt check to make sure i could cover it and i got boned. you people need to learn to be more responsible and read the fine print when you enter into a contract with another party

8/16/2008 9:19:49 AM

Quote :

"the appropriate legislation should be to require ALL financial institutions to process transactions in the order that they are submitted. All transactions have a date and time stamp, they should be processed in that order only. in a digital age, there should be not reason we can't have instantaneous processing of deposits, transfers, and withdrawls."

I can see how that could be bad. Bank computer networks tend to be slow and reliable and even then transactions are held up temperally for any number of problems you and I know nothing about. As such, because transactions can be trapped in the system for some time, how is the computer processing one transaction to know another is coming? I guess when the next transaction arrives it could undo and then redo the previous transaction, potentially screwing up other network processes which were triggered earlier.

This could be a very real technical difficulty for banks. I suspect what banks would do is prevent posting of transactions long enough to make sure all prior transactions have come through so they can be processed in the proper order required by your law. But I suspect that would make some people worse off, since when they check their balance it will always be yet another day behind.

But, why do we need a law when we can very easily just go on television and tell everyone to get a checking account at the SECU or Capital Bank if they are worried about overdraft fees? Afterall, Wachovia used to offer fee-less overdraft protection, they stopped because their customers did not mind the fee. Well, we need to make their customers hate the fee, and Wachovia will stop charging it.

8/16/2008 10:04:16 AM

Every time I have an issue with Wachovia, I go into the bank and ask them to fix it (even if its a standing policy they had). So far, they do in fact fix it, so I stay with Wachovia. Better than BB&T, a bank that I left at age 10 and will never go back to over a matter of $5.00.

It would take me about 3 hours to change banks and set up all my billpay options. (For some other options like my mortgage holder if might take longer, but they don't charge unreasonable nickel and dime fees in the first place). Or I would have a slightly decreased service level/worse interest rate ALL the time for additional regulation. For much the same reason I have no comprehensive coverage on my 10 year old car, or don't pay for a home warranty, I would be against additional regulation.

8/16/2008 10:08:23 AM

ING Direct is pretty good on fees as well. They assign you an overdraft credit line and you just pay them back at 9%.

8/16/2008 10:25:57 AM

Quote :

"If you don't spend money you don't have, then it doesn't matter what order the transactions are processed in."

Quote :

"$50 originally in account +$100 deposit -$50 check -$17 purchases =thinking he still has $83"

It just feels good to some of you people to talk down to other people about how irresponsible they are, doesn't it?

8/16/2008 10:56:08 AM

My only gripe is when people complain and flip out because they used their debit card to make a hotel reservation, rent a car, or otherwise secure some kind of large purchase and now their funds are locked down for a week as pending transactions.

This also applies to the common misconception where crooked waiters and bartenders "overcharge" patrons for their dinners and drinks.

8/16/2008 11:05:35 AM

^^ Only to those who believe that "thinking he still has $83" is the same thing as actually having $83.

Quote :

"For Example Let's say Bob deposits $100 into his account on Friday. After which a check bob wrote 3 weeks ago finally gets cashed for $50. Let's say Bob has $50 in his account now. Over the weekend he makes three debit card purchases in sequential order of $5.00, $12.00, and then (thinking he still has $83) a purchase of $65."

$0 Starting balance
+$100 deposit
- $50 check
-$5
-$12
-$65
---------
=-$32

If hypothetical Bob actually had the $50 to cover the outstanding checks, then he would not have been subject to the overdraft charges. You can call me condescending, bitch and moan about the order the transactions are posted, or complain about the high penalties, but it doesn't change the fact that hypothetical Bob spent more money than he had.

Checks and debits are processed through government and private clearing houses. The debts are batch processed from various sources in a predetermined order. In other words, your purchases are not neccessarily (read: probably not) processed by the clearing house in the order you made them. Your bank has no control over the order your debts are received from the clearing house.

The whole system of transferring money between banks, cashing checks, debit card processing, etc. is setup and regulated by the Federal Reserve.

[Edited on August 16, 2008 at 12:14 PM. Reason : ]

8/16/2008 12:12:45 PM

I was hit with a 35 buck overdraft fee when my car payment autodrafted from my bb&t acct. (I only use that acct to pay my car payment.)

I put money in the account before it drafted, yet they still hit me with the fee. I got them to take it off, but it was a huge hassle, and i will be promptly closing my account after my final car payment drafts this month.

8/16/2008 8:21:45 PM

Quote :

"the point is that shit happens and i didnt check to make sure i could cover it and i got boned. you people need to learn to be more responsible and read the fine print when you enter into a contract with another party "

The point here is not that overdraft charges are wrong, but that processing transactions out-of-order to maximize such charges is. It's also potentially illegal.

What's more, transactions that are instantaneous (transfers within the same bank system for instance) are often not instantaneous with respect to the balance availible to the customer. This is done so that the bank may continue to use that money and earn interest off it, while interest and use is denied to the customer. This also increases total fees since the more time money spends inaccessible to a customer, the more chances that a charge will hit that will make the balance negative. This practice is fairly dishonest since the "transit time," especially within the same bank, is a fiction.

8/16/2008 9:11:17 PM

Quote :

"processing transactions out-of-order to maximize such charges is. It's also potentially illegal."

Do you understand why the charges are out of order? Do you have any idea how money moves between banks?

8/16/2008 9:35:31 PM

at the very least, the bank should have to apply transactions from the weekend in order. As in, if they receive, over the weekend, several transactions, then when they come in on monday morning, it seems logical they could process those in the order the transactions occurred.

8/17/2008 12:19:12 AM

^^Yes. I do.

Please re-read and take note of my emphasis on "WITHIN THE SAME BANK." I'm also not talking about credit/check card transactions which the bank does not directly control. Those transactions are reported to the bank by the credit card companies and the "order" is arbitrary since they all post x business days later at the beginning of the business day, or at the discretion of the credit card company.

I'm thinking of a particular experience where I had a deposit made to my account directly by one wachovia member at 4 pm on a Friday. It showed up in my account and I spent that money over the weekend. That Monday I saw I had gone over $100 negative despite having a positive available balance when I checked on that Friday evening. When I asked they showed me that all the transactions from slightly before the deposit onward "posted" monday morning in a very different order than they occurred. Of course, the deposit was (in a retroactive manner even) listed last in the order and thus ALL my transactions were considered to be over-drafting. This was despite my protest and showing the receipt from their ATM that showed my AVAILABLE balance as quite sufficient post-deposit.

There were no outstanding transctions from anything done before the deposit either. The last out-going transaction was over 2 weeks old, as was the last incoming one before the deposit. They said that normally they would "waive" one or two of the fees but that since they had done so previously they could not do it that time. The first time they waived it was for when they mistakenly withdrew twice for a certified check I got there; it seemed infuriating that their mistake ate up my ability to have fees waived. Quite frustrating and one of the many reasons I now use a credit union.

[Edited on August 17, 2008 at 1:17 AM. Reason : ]

8/17/2008 1:09:11 AM

nice. "We're sorry, we fucked you once before, so we can't forgive you this time." If they had said that to me... I would have replied "I'm sorry, I bounced a check before, so I'm going to need you to honor this bounced check, ok?

8/17/2008 1:20:32 AM

It was basically like being told they enjoyed fucking me so much the first time that they just wouldn't take no for an answer this time.

Really though, I'm sure most banks and bank managers aren't that bad. It probably didn't help that I was 17 and so they were pretty sure they could just jerk me around with impunity. Since I was in high-school 90% of the time they were open, they were pretty right.

[Edited on August 17, 2008 at 1:27 AM. Reason : ]

8/17/2008 1:25:17 AM

should have brought your parents in there. That's like a sign to pretty much anyone that you aren't going to be fucked with. and it works

8/17/2008 1:31:05 AM

Quote :

"I'm thinking of a particular experience where I had a deposit made to my account directly by one wachovia member at 4 pm on a Friday. It showed up in my account and I spent that money over the weekend. That Monday I saw I had gone over $100 negative despite having a positive available balance when I checked on that Friday evening. When I asked they showed me that all the transactions from slightly before the deposit onward "posted" monday morning in a very different order than they occurred. Of course, the deposit was (in a retroactive manner even) listed last in the order and thus ALL my transactions were considered to be over-drafting. This was despite my protest and showing the receipt from their ATM that showed my AVAILABLE balance as quite sufficient post-deposit."

This exact same thing happened when I put money in ncemt_03's checking account when he was in NYC. It was a cash deposit made after 4:00 on a friday, I had the receipt for it but they still said he over drew all weekend and nailed him with the charges.

Seriously fuck Wachovia.

8/17/2008 1:33:07 AM

exactly. THAT is the kind of shit that should NOT be allowed. They have the money and are earning interest on it THEMSELVES, yet they will say it's "not there," and somehow they magically get all of the other debits before they get to that credit. seems a little too convenient, if you ask me

8/17/2008 1:34:31 AM

You want to fuck them? Close your accounts and go to another bank like I did. Chances are, you meet some random elligibility requirement for one or more credit unions. Coastal Federal and State Employees' are both good ones. Just move in with a member for a month or two and you're in. You don't even have to sleep with them if you don't want to.

[Edited on August 17, 2008 at 1:36 AM. Reason : ]

8/17/2008 1:35:41 AM

i'm already in SECU, and I love it. I live in Augusta Georgia and I STILL use SECU as my bank. That is saying something when you are willing to live with the inconvenience of no ATMs or branches within a 120-mile-drive. Hehe, all of the checks that I get I mail into the bank, and I have no concerns about them being cashed, cause I know they will be handled fine.

8/17/2008 1:44:31 AM

You might want to check if you can use the Georgia SECU. secuga.org I think?

8/17/2008 1:46:31 AM

i'm a member of a POS credit union around here, but I never use it. They just have 25 dollar bux of my money. the interest rates are absolute shit. I only have it on the off chance that I need a loan around here. I'll look into the ga secu, but I doubt I'm eligible. plus, I've never even seen a branch for them around here.

8/17/2008 1:49:01 AM

Am I the only one who gets mysterious double fees?

I think I'm gonna go and ask them about it. I might be due tons of back loot from being overfined.

But I gotta be careful cause they might charge me for asking a question!

8/17/2008 2:13:29 AM

I've been a member of Truliant since I got my first job and have had an overdraft protection line of credit from the start. From reading the thread, it looks like others also have a similar line of credit but you actually get charged a fee for using it? Or do you have a generic line of credit that can be used as overdraft protection for a fee?

8/17/2008 11:24:04 AM

Every bank I have used has had some kind of very visible reminder posted that states their deposit availability timeline

8/17/2008 1:09:25 PM

Just use a credit card. I write one check a month. . . to pay my credit card bill.

8/17/2008 8:24:32 PM