Reader Steve J writes:
A long time BofA account holder who enjoys living dangerously with his balance, I’ve had my pocket picked to the tune of $300-400 with this artful setup. It’s rather simple. If you have multiple transactions in a same day they process the largest dollar amount first. This means that if you overdraw your account on a day where you have a particularly large transactions, you end up paying the maximum overdraft fee allowed by math. A numerical example to illustrate:
Sucker A has $300 in his BofA account on the day in question. Sucker A pays a $250 car payment, $100 for groceries, $50 for gas and $25 for assorted adult DVDs. BofA will process the transactions in descending order of size. First $250 is withdrawn leaving Sucker A with a balance of $50. BofA then process the $100 transaction leaving Sucker A with a balance of -$50 and incurring an overdraft fee of $30. BofA then process the $50 transaction leaving Sucker A with a balance of -$100, incurring yet another fee. The $25 ill advised purchase is then processed, leaving sucker A with a balance of -$125 and incurring another fee. That 3/25 special on bootleg asian porno ends up costing hapless Sucker A $55.
More math—but explained by a person who writes checks for porn—after the jump.
I’ve explained to BofA that the order they process things in in all cases must lead to the mathematical maximum of overdraft fees paid by the account holder. I’ve explained this to them over the phone, in e-mail and even via a spreadsheet. Their response is, that’s the language in your account, tough nuts. The other, and more insulting response is that they do this for your own good. You wouldn’t want your car payment to bounce would you? To be honest BofA, I could give a shit, I just don’t want to pay you $90 of overdraft fees when I could have just as easily paid you $30. My car company already knows I’m a deadbeat, what’s one more bounced check. Plus, as I have overdraft, it’s not going to bounce anyway.
Let’s run the scenario the other direction, to process the transactions from the same day in ascending order of amount and see how much sucker A pays in fees. $25 for porn, Balance is now $275. No overdraft. $50 for Gas. Balance $225, again no overdraft. $100 for groceries, balance $125, yet again no overdraft. $250 for car Sucker A cannot really afford. Balance -$125 and an overdraft fee. One fee of $30 versus 3 fees of $30, all based on how they arbitrarily decide to process things.
I’m aware that it’s in my contract, I’m aware that I shouldn’t bounce checks. I just think that other consumers should be aware that when playing overdraft roulette, BofA puts 4 in the cylinder instead of 1.