I don't use a bank if they don't let you turn overdraft off. If there is not enough money in my debit card account I don't want it to automatically take money from my savings, and rape me with charges. I want it denied. If I need money in a emergency, I'll use a real credit card.

Simple... they deducted the debits before adding the credits in order to justifying charging outrageous fees.

I was about to get uppity at this guy, and pretty much blame him for spending more than what was currently available in his account. Because let's face it, banks take their sweet time in clearing deposited funds - everyone knows that. You don't deposit a check and then turn around the same day expecting the money in there.

I wouldn't call this new policy "retarded", but it's just a way the bank can squeeze more money out of you (by processing the debits before processing the credits). This really grinds my gears, but whatever...

Close your account and get to a real bank.

My bank has done this since forever. You make a deposit, the first $100 becomes available, the rest of the funds go through when the check/whatever has cleared through a teller or the issuing bank.

I can't imagine him not knowing this, but since it was a new policy and they sent him a notice about it, they were good to refund one of his overdrafts.

Personally I don't spend any of my deposit until it has completely cleared. Imagine making a bunch of purchases just to find out your deposited check bounced.

There is a difference also between your "balance" and your "available balance". Every bank I know of does this. Try automatic electronic deposits, which most employers now offer. The entire amount should be available immediately.

I understand his frustration, but I doubt he will find another major bank that doesn't put some kind of hold on deposits.

A bank called 5/3? WTF?

Many banks do this, just check your funds availability policy. I believe most banks will make the first $100 of ATM deposits, whether they be cash or checks, available immediately, perhaps while they retrieve the money to verify the amount and/or clear the check. Face to face deposits by check are follow the same rules, but i do believe cash deposits face to face are available immediately.

I've always viewed having the first $100 available more as a courtesy.

5/3 is pretty much the worst bank you could have chosen. I spent almost a year living in Bloomington, IN and was more or less forced to use them for lack of options and had nothing but horrible experiences. It got so bad I would just cash my paychecks and use all the cash instead of depositing anything in my 5/3 account.

Wait - find out if this customer is a cop, cause if he is, he must have had this coming to him, and we should all blame him and not the bank!

@pinkbunnyslippers: Fortunately, he already plans to close his account.

Was it an out-of-state check?

Another issue is the debit transactions of 7/27 and 7/30 and his balance "at that point in time" (if he reviews his electronic funds regulatory disclosure I'll bet it's in there).

The "authorizations" are set in place against the account based upon the balance available "then" (? end-of-business day on 07/27?) not "after or subsequent" the deposit showing as posted (not the same as "collected") a few days later on 7/31.

This policy can depend a lot on how much you have or do not have in a savings account at that institution. If you have a couple of thousand dollars in a savings account or CD account, they should waive the hold on a transaction of this size. If they don't, move all your business to a credit union that will. AND they should post credits before debits.

@Myron: Sounds like a good name for a bank that's impossible to Google in order to see if customers are happy.

Hmm... I've actually never had a problem with 5/3. I will admit that I know every single person that works in my local branch at this point and they all bend over backwards to help me, so maybe this is just one of those "small-town advantages". There are so few.

@Don Roberto: Actually, the Funds Availability Act (Regulation CC) requires banks make the first $100.00 of any deposits on a given day immediately available.

@timmus: It's pronounced "Fifth Third"

[www.straightdope.com]

I had a different (but similar) kind of issue at a local credit union. They would put the whole check in my account (cool!). I thought this rocked until one check was placed 'on hold' after it already entered my account, here's an example:

Day 1: Deposit large (for me) $1,500 check from my e-trade account at around $10am or so.
Day 2: All $1,500 shows up correctly
Day 3: Pay bills, spend money
Day 4: What is this? $1,400 missing from account! Negative galore! Call bank, find out check was placed 'on extended hold' because etrade is taking forever to process (!?) so they remove all but $100 from the account bouncing anything else. I finally got it resolved (after two weeks) but not to my satisfaction, unfortunately this whole scenario was covered under their available funds policy and I was pretty much screwed.

This was a few years ago (and only happened once while I was a customer of theirs) and they always had other problems (direct deposits not showing up, etc) so I eventually moved on. Was a huge pain in the ass though.

Many banks have been doing this time immemorial. Chase Bank is one of the guilty parties that will sit on the funds for a check (even if it originates in the same municipality) for 4 or more days, as I bore witness to my paycheck not being fully funded to my account as "available" until a Saturday, after having made a deposit on the previous Monday.

One of the few banks that don't have a waiting period for available funds in Commerce Bank, which clears checks for available funds by the next day, if deposits are made before 6pm. . . And they also don't charge the large numbers of fees for every little transaction either. . . (Or none that I have witnessed yet, anyways.)

I had a similar problem a while back and did quite a bit a research as to why this is. Legally they need to give you $100 when you deposit a check but that is all, which only proves the complete bank lobby influence that was taken into account when Check 21 was passed. When you deposit a check legally this check must be processed within 24 hours by the Fed and the money is withdrawn from the check writers account. The fed processes checks from 7pm to 7am and will process your check at this time. However you would think that if the fed processes the check at night and withdraws the money at that time then you should get the money posted to your account. This is where the bank lobby comes in.

Legally they do not have to place money into the account for 3 business days if it is an in state check and 5 business days for an out of state check. (I think those are the numbers, but it was a while ago when I did my research, regardless it is way to long.) So in the meantime the bank gets to sit on your cash and collect interest while you are waiting for that cash to post. Citibank, though I don't like them, posts checks to my account right away, but they don't have to and I have a feeling if I deposited then withdrew cash that money would be "on hold" or something so they can charge me overdraft fees like they did before, but that has yet to be proven.

Either way the banks get to sit on your cash for as long as legally possible so they can get that interest/overdraft fees for their bottom line.

yeah but are they depositing $100 automatically before the check clears? Deposits usually take 24 hours to clear. Especially if through an ATM.

Sounds like user error.

@Majwell: depositing a check is not "sitting on cash" - its sitting on paper. Until the originator of the promissory note transfers funds to to the receiving bank, its just a promise and worthless.

Who the hell needs to put 97c on a debit card?? Jeez, does no one carry cash anymore? And people wonder why transaction fees keep going up. To pay for crap like that.

well fuzz, i've been in some pretty questionable gas stations with weirdos all around me and the last thing i want to do is flash a hun for a freakin coke, so i pull out the card. discreet! no one notices i'm breaking the cashier for change.

not too mention it seems like people will barely cash a twenty

People, this is why you need to do business with a credit union. They are up front with all of their charges and don't try to rape you for BS fees.
But the key rule here is: after you deposit a check, make sure it reflects in your balance before you attempt to spend any of it.

@goodguy812:

Why not pull out a $1 or a $5? Why go straight for the hun? Which you probably had to go to a teller to get, anyway.

First of all, Fifth Third is a quite old bank, they've been around forever. Their policies are pretty standard.

Second, EVERY bank is required to post their "funds availability policy". If you don't read it and understand it, you are an idiot. If you don't like it, you should go elsewhere. The first 100 available is required by law; the rest will happen on the banks schedule.. Yes, it's not "fair" that check 21 can debit instantly but not credit instantly (it can and does happen, by the way), but that is the way it works. Banks do not have to make funds available instantly, and many of them don't. The reason is to verify the validity of the check.

Very few banks guarantee same-day funds availability on a check deposit. Sure, they may do it at times - but that doesn't mean they'll do it every time with every check. Betting on that happening every time is naive.

So, ok, as usual, everyone here rants on the evilness of banks - when the guy deposited a check and then started spending off his debit card immediately? Within what looks like minutes? And yeah, that 94 cent transaction is pretty sweet.

As for the guy who uses debit declines as a money management tool.. Are you serious?

No one noticed the $2.50 ATM surcharge? For shame!

So, I am Chris. I sent this in a while ago, so I was suprised to see it make it up here. Thanks though!(PS Ben, if you could maybe append this to post as well?)

Some clarification, and responses:

This was a local check. It happened to be my paycheck. I've deposited it every two weeks at the same 5/3 branch for over a year. Every time I deposit the check, it is made available to cover everything at midnight when they process transactions. I was expecting it act the same way it had for the last year.

I guarantee you if this was my first time depositing a check in a few months, or it was an out of state check, or whatever other circumstance it could be, I would have exercised more caution. But why shouldn't I expect the check to cover everything that was going through that midnight, if it had every time before?

I've learned a ton of lessons from the consumerist on managing my money, and actually use Ben's spreadsheet that was posted a while ago to track my money. Overdrawing is a complete rarity now, and if it happens, it's something that I've clearly overlooked and I assume full responsibility, and never ask to get the fee reversed.

Again, this happened because fifth/third changed a policy. The policy was to then cover ONLY the first $100 dollars of the check. I have adapted my spending around this now that I am aware of it, and have not overdrawn since.

And about their notifications..

They sent out paper notices, apparently, but I just shred my paper statements, because I track everything online. The notices were not included in the PDF along with the online statements.

They also had a bit clearer warning on the page you see when you first log in. I suppose all these years of web browsing has trained me to ignore anything that is bunched in with a column of ads.(their notice advertisement was located just above an ad for a mortgage and a credit card. I just disregarded that entire column).

I feel that they should have something in red, or something more in plain site, or even a pop up window. I'm familiar with web technologies, and know that there are definitely ways they could have improved their notification of this change online.

PS: The ask staples about the .94 cents. I went to make copies, and their machines didn't accept cash or change any more. Only plastic.

Hi Chris. You are excused for the staples charge :)

Pet peeve of mine is people using a debit card to pay for everything every where they go, even if it is a pack of gum or cup of coffee.

I'm not sure what more they could have done. They sent you a paper statement with a notice of the change, they had a notice of the change right there on the website when you log on. They decided to change their policy and let all their customers know. Is it their fault that you shred your statements or ignore the online notices? They also just started what is already a pretty standard policy. I think the bank is in the clear on this one.

They were nice to refund one of your overdrafts.

@ekthesy: Tell me about it. I generally liked 5/3, but I HATED their ATM policies. They charge 2.50 on top of the ATM fee's. It's a rip.

@Fuzz:

Ha, thanks. I try to use cash whenever possible. I was pretty peeved at the small charge too, but whatever.

Yet another reason to get a credit union.

@beyond: Like I said, I feel that their efforts to notify online were pretty week. A change like that could have spiced up a bit. Like I said, it was in a column that's normally used by ads. A single pop-up window, even just a one time pop up window, could have done wonders.

That being said, I do understand that the burden of accountability still lays with me. The idea of overdrafting that week, and by that amount, just added to the stresses that already accompany moving, so I may have overreacted a bit, but I should state that I was very polite with all customer service person ell that I spoke with, and did not yell or anything like that.

That being said, overall, I'm satisfied with the outcome. I had one fee refunded, and looking back, it seems pretty reasonable. I think that they could have taken a few very simple, and very painless steps on their part to up the awareness of the change, but I understand that the bottom line is: I didn't pay attention, and I paid for it. Literally. And as much that I hate the fact that I lost money out of this, I'm glad that I'm walking away from the situation having learned a few more lessons about life.

@cardboardrobot: I think a good lesson here is that you don't want to be ignoring much when you're dealing with a bank and your money.

People hate to read things like credit card terms and conditions and bank policies; but not doing so is a perfect way to get your ass bitten.

Again, to beat a dead horse, responsible "consumerism" is to allow consumers to be armed with information - such as knowledge of the policies of companies they do business with (or also choose not to do business with, because of those policies.)

It is not simply stringing up every company, and then yelling "victim blaming!" when people remind folks that accountability goes both ways.

They did notify Chris of the policy. In multiple ways. Ignoring it was a mistake.

@tcp100:

It wasn't that I was like, oh, bleh, boring bank stuff, and ignored it. Had I seen in red somewhere: Important bank changes, click here to read. Then I would have checked it out. If there's fine print somewhere, I read it. I like to know what I'm getting myself into in advance. But that wasn't the case. As I said, they lumped it in with ad's, and I don't feel it was in plain sight.

Now, is it the banks fault that I didn't see the notification? No. And like I said, I've come to realize that after the dust has settled, and am satisfied with the outcome.

I still feel however, as I've said twice already, that I feel their online notification attempts were inadequate,

@tcp100: I agree with you completely. However it's not as if I purposely ignored it. If I had seen it, I would have read it. It was simply unseen to me. The notification was in a column to the right of the page with ads, away from anywhere they usually display worthwhile information.

Does that make it the banks fault that I didn't see the notification? No. But I don't think the bank made enough efforts to advertise the change online. They could have emailed. They could have included it in a pop up. They could have done a number of things that would have required minimal effort on their part, but made a world of difference to customers like me.

Anddddd, I ended up double posting. Sorry bout that.

Paycheques can be processed as cash, (at least, this is the case in New York; YMMV) and as such, be 100% available immediately, but you have to ask for it. How to do this depends on what bank you are using.

My wife's bank will do this if you ask the teller, verbally, to post the transaction immediately.

My bank will do this if you enter the amount on the deposit slip as cash, and then sign the cheque as though you were going to cash it rather than deposit it (i.e. do not write "For deposit only" in the endorsement).

Paycheques can be cashed, even if the amount to cover it is not in your account. This is a special dispensation given to paycheques and a few other specific types of cheques only. If the bank will not give you a mechanism to deposit with full availbility, cash the cheque, then hand the cash back to the teller with your deposit slip.

Of course, if your bank's hours limit you to only using ATMs, then you're hosed.

They could have emailed....Regulations restrict banks from sending unsolicited email, but more importantly, the Fed Regs say it needs to be postally MAILED and AVAIALBLE at the branch. Email is not the "regulatory" method of notification.

They could have included it in a pop up....and since many of us block pop-ups (you see where this leads...). But they did include it in your log-in authorization.

They could have done a number of things that would have required minimal effort on their part...they acted upon the Regs and then some. It's up to "us" as consumers to follow-through with our own due-diligence.

@NoWin: I wish they would have included it in the login auth window. Maybe I would have seen it then.

@cardboardrobot: I guess they could have come to your house and notified you in person with a muscled thug :D

I guess my whole thing with banks is that they are not our "money-managers" per se (although thats what many mistakenly perceive them to be), but intended to be a secure repository of our funds.

Congress sets the laws by which they ensure the validity and security of those deposits. It's up to us consumers to be know how to efficiently and effectively use that repository to our best interests.

@NoWin: I've worked with companies where regulatory issues guide their communications (healthcare industry), and I do have to say that a common mistake is spending so much time following regulations to a "T" that you miss the other things you should do for your consumers.

It's a bit of a double-edged sword. Regulations are often there to protect the consumer, but boilerplate regulations don't adapt and address every issue. In 1975, I'm sure in-bank posting and mailed notices were more than sufficient.

The problem is, the bank has a lot to lose if they don't follow regs, as inefficient as they may be - so they spend a lot of their energy with compliance, and little is left over for studing other useful ways of interfacing with the customer.

So, people clamor for regulations, but they help and hurt. That, and (I am NOT talking about you, Chris) so many people just don't want to read boring notices. There isn't one blame here; but you mix federal regulations, limited budgets, blithe consumers and boring language - and you're in trouble.

Smart companies figure ways around this; look at some of ING's "plain english" Ts&Cs (although they haven't been immune to bad relations, either.)

Money's a tough thing, and banks are in a tough business. People are very sensitive about their own money, as they should be. Combine that with the fact that many people believe a bank should be perfectly happy to maintain a free checking account with an average daily balance of $12.32 all while bouncing off debit card declines as a "money management tool", and no wonder banking has so much ire directed towards it.

@NoWin: Exactly. However, any time an issue like this comes up, you get the guys saying "they should decline the transaction when I have no money!"

Sigh.

If only networks and databases were so good that all transactions posted instantaneously with zero conflict and delay.. I'd be out of a job.

Banks aren't there to watch your account and tell you what's wrong or right. Their job is to keep your money secure and accounted for. I know it's foreign with a lot of younger people today, but not too long ago everyone carried around "check registers" and actually deducted things from their balance as they bought them.

You should always know what's in your account.. (Again, this isn't you, Chris, but so many people I know think that the ATM is the same as Microsoft Money). Charges may take an hour, a day, or a week to clear. You cannot trust your ATM balance!

Things like funds availability policies are part of this knowledge, and things you have to know when shopping for banks and being an educated consumer. Expecting a consumer service as complex as a bank account that offers debit cards and checks to be "foolproof" is foolhardy.

What they should have done (besides trying to convey useful account information in the same way that they spam you with ads) is to add a column to their online account summary (and a line to the ATM receipt) that says AVAILABLE Balance as well as the Current balance.

Wells Fargo has been doing that for ages, there's no reason to not allow the customer to determine how much money they actually have to spent.

@tcp100

The problem is, the bank has a lot to lose if they don't follow regs, as inefficient as they may be -.

Bingo! Well said.

The Fed's allow no "grey-area" of interpretaion. The regs are the regs. The "lot to lose" is the bank's state or federal Charter....(disclaimer: I work for a bank, and unfortunately know most of our state and Fed auditors on a first-name basis. Not because we've done anything wrong, that's just the way it is these days...)

I think I meant: "Not because we haven't done anything wrong, that's just the way it is these days..."

TCP100: excellent summary!

Does anyone else's bank do this? My paychecks are bi-monthly for the same amount each time. If my account is debited on the 14th or 29th and there are insufficient funds to cover the charge the bank does an automatic payroll-advance based on my regular deposit amount. No fee. They then process the deposit as normal.

Also, my paychecks are always 100% available as soon as they are deposited, all transactions are processed daily (deposits are processed before withdrawals, instead of withdrawals before deposits like my wife's bank), and overdrafts are processed to my 3.9% APR line of credit at no charge. The only thing that would make them perfect would be refunding ATM fees.

Who's my bank, you ask? The "Evil" Wells Fargo.

How did I get this? I walked into a branch, sat down with my banker (NOT a teller) and politely asked. Whenever I get those change of TOS notices, I call and tell them I don't agree, please change it back or I close the account. They always change it and send a new letter.

Ask politely, though YMMV.