It's obviously not making them THAT much money. I hope the fed has overdraft protection for their bailout checks.

@Git Em SteveDave loves this guy->★:

Dont you know? The fed doesn't actually have to have a balance in their accounts to withdraw funds. They just edit their account and add a few zeros to the left of the decimal point and make sure they have a one all the way to the left each time.

This very practice is why I HATE National City. They are the first bank (first place I had was a credit union, then my wife's small town bank because it was closer, and then National City because of fraud) that has ever re-ordered transactions and I've actually gotten into the habit of taking daily snapshots of my transactions online just so I can demonstrate to my wife, and anyone that loves to support National City, that they in fact do this.

*Because it isn't enough that I can prove when transactions actually took place, the average time it takes to process said transaction, and the almost clockwork fashion in which all my transactions get re-ordered.

/Yes, this practice has screwed me
/$36 at a time

@tmlfan81: Perhaps this guy wanted his overdraft fees refunded.
[www.pantagraph.com]
I saw the police racing to the scene on my way home from work tonight.

maybe people should realize they have a bill due and pay it before they are down to the wire.

Back in the day when a bounced check ment that the check was not paid this practis was nicer. BuuuuT if the bank is going to sit there and drive the acount 400% MORE into the negetive by not only "Bounching" but Clearing each check then the "nicer thing to do would be"

Pay the cable watter bla bla bla and let the big boy bounce (charge fee and then get cleard for payment)

@Roeroica: It's important to remember though, that this is the United States, where the average person spends beyond their means and has tons of debt. So for most people, paying bills "down to the wire" is probably far too common.

@Roeroica: I currently have a negative balance because my trust department had a 'system change-over' and my monthly transfer of $3000 was not sent.

There are many reasons why people keep the bill account small.

@Roeroica: Wow I guess you must be rolling in money. Not everyone is as lucky as you!

@Zagroseckt: I didn't understand a word you just said.

@Roeroica: Always preferable but not always applicable. Those making minimum wage get shafted the most by this.

@Roeroica: Some of us have problems paying bills not due to not having money, but b/c we have organizational issues that aren't in our control, and sometimes sh1t happens. I'm just saying that I have forgotten to pay bills once or twice, and only realized after sending the checks that I didn't make a deposit or two or transferred money from my online savings account to my checking account. What's bad is the banks "protection" costs more than the bounced check fee. I had this issue with a CC. Rather than decline a sale, they charged me $35 /c I went over my limit. They said it was so I wouldn't get embarrassed. I told them my pride is worth less than $35.

@Roeroica:
I'm so glad that you realize that you are both more intelligent and responsible than most people! You also, apparently, make more money. Some people, like me, don't make a ton. I won't until after I get out of law school. Until then, it can get down to being the day of, or occasionally, the day after something is due before I have the money in my account to pay it.

An unexpected expense of, say $300, that is nothing to some people, can affect my budget for a month and a half to two months. Since you have all that extra money, and you're so responsible, how about you send me a check for a couple hundred dollars and demonstrate how wise and wonderful you are.

And yes, I budget harshly. My only un-necessary expenses are on slightly nicer ingredients to use cooking at home. I view those as important, since I'd rather spend a little less overall on quality and healthy food than a ton on health care resulting from the over consumption of processed foods.

Don't be such as a$$hat

or, as an alternative, people could actually balance their checkbooks like they agree to when they open an account and not make transactions for more than what is available.

This would suggest they actually read their Deposit Agreements (the booklet of fine print that comes with a checking account), which, in my experience working in the call center of a major bank, they rarely do.

@Roeroica: Obvious troll is obvious

It's just plain dishonesty. It's not helpful to anyone. How can they get away with arbitrarily reordering transactions just because they happened to arrive within the same calendar date?

* Scenario 1:
Your paycheck (+) is deposited at 11:58PM. Your mortgage payment (-) goes through at midnight. Since these are separate calendar days, the bank can't reorder them. All is well.

* Scenario 2:
Your paycheck (+) is deposited at 11:58PM. Your mortgage payment (-) goes through at 11:59PM. Too bad for you, the bank has decided that you'd really rather the mortgage payment be processed first. Massive fees headed your way.

I really believe this is fraud.

@RevMorose: Of course that is assuming that the bank doesn't accidently transfer money out of your account. Or a merchant doesn't double or triple charge you on a debit card. Shit happens, and despite making a good living, I have been down to the single digit dollars in my account.

A few years ago I was burned by making a deposit (minutes after 3pm) had some change about $50 dollars worth, and then taking $20 out of the ATM.

Since my deposit was after 3pm, it was credited on the next business day.
Since my ATM withdrawal was after 3pm (but before 6pm) it was debited on that business day.

The Overdrafts ate my deposit. Quicker than you can say "Banker needs a new pony!" Guess I should learn to balance my checking better, er RevMorose?

PS. The best part was there were three small checks went through, each less than $5, no more than $8 total. Each had their own double overdrafts. I think it was over $200 by the time the dust settled.

@Roeroica: So fraud is OK, because it is the consumer's job to anticipate and plan around fraud attempts? Financial planning practices are not the topic being discussed.

@oneswellfoop: That's a great way to get people on your side... "Since you have all that extra money, and you're so responsible, how about you send me a check for a couple hundred dollars and demonstrate how wise and wonderful you are."

Look, my family came to this country with literally nothing. My great grandfather was an indentured servant who worked his way out of debt in Poland. He did all this only to end up living in the Great Depression. Instead of asking for handouts, why not act greatful for what you have. The ability to go to law school is an amazing opportunity, and you should be proud of that. Don't ask for sympathy, work for respect.

@RevMorose: How do you suggest one keep an accurate balance in your checkbook when:

1) The bank is re-ordering deposits without telling you
2) The bank is delaying deposits without telling you
3) The bank cannot give you an accurate balance at any time

Sure, grandpa, you could probably have avoided all of these problems back in 1940, when you actually could rely on the bank to be using the same kind of accounting you were using to balance your checkbook.

Here in the now, with "creative accounting" fully deployed against your financial interests, a balanced checkbook is absolutely no guarantee that you actually have any money in your bank account, no matter how good your math skills might be.

I think what's worse is the practice of defaulting to withdrawals first, *then* deposits, regardless of chronological order. Are banks still pulling that crap, too, so you can actually have the money and *still* get hosed?

@midwestkel:

The acid kicked in while typing...

@RevMorose: see roeroica response above.

If the banks are concerned about their customers' desires as to the order of clearing charges to their accounts, I believe it may be possible in the 21st century to ask them and program the bank computers to follow their wishes.

Banks have been calling these "Convenience fees" for quite a while. Funny thing is, it is only convenient to the bank, not the consumer. This is an excuse for the banks to rack up more money. Even if one were to go to a bank and tell them, if my account goes red (into the negative) then decline the transaction, they won't do it. They will refuse to do it because they know this makes them a lot of money.

At the very least, congress should pass legislation that allows a consumer to OPT out of this shady financial practice. Of course the banks are going to try and make it difficult to do that and will certainly lobby against any legislation pushing forth in this manner.

My daughter's daycare holds the checks for random amounts of time, up to 3 weeks, before depositing. My wife's doctor, inexplicably, has held checks for 4-5 months at a time. I can usually keep track, but money is tight right now and it's hard to keep track of everything after so much time, and my wife is less careful than I am. At the very least, I think it's reasonable to restrict banks from charging more than 50% of the value of the transaction and no more than 15 dollars per transaction. This will make the banks be more likely to offer REAL overdraft protection. It's not going to hurt them, it's not like they do any work for it, it's a generated computer response on your account, I get generated emails, and I used to get regular mail recapping the overdraft fee. The only thing about it that actually costs them anything is paying the CSRs who have to continually deal with people calling up to complain that their paycheck was held so their car payment would bounce etc etc.

I work at a credit union, where we have a 'real time' system.

You make a deposit at an ATM at 2:30 AM? You get the first 1000$ credited instantly.

Your automatic payment for your mortgage is the same day as your direct deposit? Guess what? Your direct deposit comes first, then your mortgage payment!

As far as what Tsubasa was talking about, we reverse any overdraft fees that were caused by fraud. Someone steal your debit card and make purchases that caused you to overdraft? We'll reverse the fees, and get you started on the way to disputing the charges and get your money back.

The biggest thing that I see is that people don't budget. The first question I ask when someone calls in to ask for a refund on overdraft fees is:

"Do you keep a check/transaction register?"

70% of them say no.

Should we reward people for not keeping track of their expenses?

I have a home based business, so I ship with Fedex every day, Fedex charge you on a weekley bases on the item that has been shipped. I used Bank fo America Ceck Card. I average shipping is 35 pieces of every week. I wrote a check for my home rent of $1650, and I had $1500 in my account and expected money to be posted in my bank account, but it was delayed. My total shipping for that week was $800. the 35 shipping charges were on hold in my daily online bank activities, then the rent check came, all the sudden all the held amounts were dropped and off course the bank couldn't cover the rent check amount, and bounced the check and charged me $35 fees, and bounced all the 35 shipping costs which varied from $15 to $40, and the back hit me with $35x 35 shipment total of $1225!!! So when I called the bank, they said nothing can be done. I said I will not pay you a dime. Moneth passed, then they called me offering me to delete some of the fees, I said not a dime I will pay from it, then they called again offered more fees to be deleted. I said no way. Then the eventually called me and offered me to pay only $200 from the fees, i said not a dime, then they refered it to a collection company, whuch i told them to F.OFF.

@Roclawzi

Well said (er, written)

"Bankers defend it saying that people would rather their cable bill to bounce than their mortgage payment..."

What they meant to say was, "If we cash the big one first we can charge the NSF fee on it and all of the smaller charges. You know, double, triple, or even quadruple dip."

This is the part that most people forget about. Everything purchased is run from largest to smallest. This includes credit and debit. They FORGET to tell you that all charges made through these companies that back these cards guarantee the money for the purchase. This means that no matter what, your account will be debited for that purchase. So, why would purchases with a card need to be run from largest to smallest?

(This might not be directly relevant to the issue at hand, but it's my pet peeve and it's about bank fees, so here goes:)

In any other business relationship, if you are charged with a fee or other penalty, you are presented with a bill which you can review and then pay with whatever source of money you choose. I think it would be reasonable to force banks to follow the same strategy; at the very least, require banks to notify you of fees at least one week before withdrawing the money from your account. This would eliminate a lot of the compounding-fee problems we see going on.

@Tsubasa: It gets worse when it's on the weekend.

I once overdrafted because of the resorting 4 fees because the charge I made on Friday didn't clear until monday at midnight.

Somehow, the computers don't like to work on the weekends.

Best finance practice: keep a ledger and follow the ledger only. Very easy to start, maintain, and reference. There's few reasons not to--I guess lack of pens is the only good one.

But more importantly: I like the idea of overdraft protection, but it definitely should be proportional to the charge. Otherwise, where's the protection? Instead of paying the bounced check fee to the creditor, you're paying it to the bank, but the fee still exists and is now also applied to debit and ATM transactions. You become more vulnerable with this service.

And OD-ing at an ATM, that's god-damned heresy!

@failurate: Exactly. Why get one overdraft fee on one mortgage payment when you can let that one go through and charge you for all the others that didn't.

Also, it's not that they "refuse" to clear a transaction when your account is in the red. Your balance for the day is the last closing balance, say $200. If you buy something for $199, then buy something else for $2, your "available balance" is -$2. But when you go to buy that $2 item, all the computer knows when you swipe your card, is that your balance is $200. Hence you get stung for $35 for that $2 candy and soda binge.

Why on earth the computer cannot track realtime balances is beyond me. They claim it's because some transactions that are pending don't actually post, so it's less accurate. But if they don't it only INCREASES your available balance.

It's not quite a conspiracy, it's just convenient computing for your bank.

@crashfrog: Sure, grandpa, you could probably have avoided all of these problems back in 1940,

.giggle.

@crashfrog: This is silly. The ledger balance doesn't have to mirror the bank's balance. I've been doing this for years, the entire time working around stalling banks, paying bills on payday, and zeroing out frequently, and I've never ODed since I started my own balance. Ledgers work and are always more accurate than the bank's balance.

You make all your deposits and withdrawals based directly off your ledger. Use the bank's information only to confirm that the changes have been made, whenever the hell that is. Exact dates are moot except when you're playing the float, or desperate to make a payment on the day you make a withdrawal.

If you're making deposits and withdrawals so close, take your check physically to a bank, deposit it in person, and get a receipt--or consider direct deposit, which has fewer delays. Make fewer insta-payments online. It's much easier paying all my bills by check and eating the stamp cost than managing even one online account anyway. Even without fraud working against you, you still have to wait for transactions to process. Ledgers help you time those transactions appropriately.

If you're forced to play the float, then you have no recourse and a ledger won't help much. It happens, that's life. Work harder, make budgeting sacrifices, and get over it. Still, keep your own balance.

You can badmouth the stupid overdraft protection service, or the banks' borderline criminal reording of transactions, but you can't ever make an argument against keeping your own record of how much money you put in and take out of the bank.

I still do not understand why these ridiculous fees are so common in the US.

Like I said before in Germany all you have to pay is interest on the amount below zero (used to be between 15 and 20% p.a.). That sucks and I'm always amazed how long you can have a nice amount of money in your account and the interest earned will be more than eaten up by just one day in the red.
If I would have to pay a overdraft fee in the range of $20 only once that would most probably eat up the interest I earned on my checking account in my entire life... the are crooks!

Unfortunately we are starting to see these pitfall fees in Germany too. Some Creditcard companies started and now banks seem to follow. Back in the days I guess people would have simply canceled business with a company that is trying to implement all kind of measures just to catch you with hefty fees.

What I'd like to know is why overdraft fees work on the basis of a flat rate? Why not have overdraft fees be a percentage of the overdraft? As it is, overdrafting seems designed to screw over people for whom ~35 dollars is something to blink at. I've been in a situation where some tiny, tiny charges I had forgotten put me slightly into the red... I'm talking -5.00, here... but in four or so transactions. Of course, it's my fault I let it happen... but is it reasonable to charge over a hundred for that?

A two-dollar snack =/= $70 Overdraft Fee

Seriously, what the hell? And this happened to one of my friends, so it only makes you think what kind of shenanigans banks are up to.

Perfect Example.
I deposit cash into my bank account every Friday an hour before the 3pm cut off when money gets credited to the next business day. At the time I was getting a $200 bill taken out of my account automatically on friday's and my account was negative $129. I deposited $400 to bring my account to $0 and to cover the $200 and a $50 bill that was to be taken out on that monday. I should have been positive $21 right? WRONG. On Monday my balance was NEGATIVE $456. I called the bank and I am told that because my account was negative, they decided on Thursday Morning to not send out the money for my $200 bill unless my account was current before 11am on Friday morning. They didn't notify me or anything. I got charged a fee for that, and a fee for the money that was taken out for the bill on Monday that didn't get paid. When I asked what happened to the Four Hundred dollars in Cash that was deposited, I was told that it haddent cleared. Cash takes four days to clear?!
I usually deposit between $200-$500 every week and in the time it takes me to drive five minutes to my house, the money is already cleared and ready for me to use it. It wasn't a holiday either, I've made that mistake before and had fees out the ass because the bank was closed a day because of a holiday. If my account goes negative it doesn't stay that way for very long, two or three days tops.

My current favorite is that if my checking account is overdrawn, they don't just transfer the money out of my savings, even though there's enough to cover the balance. Instead, they charge it to my bank credit card (which they opened for me, as a "convenience", and which I have to have for the highest rate savings account) as a cash advance on the card. So not only do I get the bounced check fee, I get the cash advance fee.

I'm just waiting for the next step, where they decide to pay my credit card automatically from the checking account, which will then go into a perpetual loop and result in me personally bailing out the bank.

Bastards of America does also practices this predatory banking. When I asked why they allowed their customers a choice of paper or electronic statements but did not allow them a choice of paying largest bills first or to pay bills as they are presented at the bank, I was told that they had to do it the same way for all customers.

When I brought up the different billing choices for customers the parrot at Bastards of America simply repeated what she has been told to say - everybody has to have their accounts handled the same way.

These practices should be banned under predatory lending laws. Because of these practices, a $3.60 hot chocolate at Starbucks has cost me $38.60. If making me a small loan of $3.60 and charging me $35.00 for the "convenience" WITHOUT MY CONSENT is not predatory lending, just what the hell is?

Predatory loans are capped at around 30%. This little drinks interest (call it what you like - but it is interest just the same) amounts to over 1,000% interest!

FVK ME! I'll loan out money all day long for 1000% interest in 3 days (the avg time it takes to charge me after they pay a larger check first and bounce my many fast food purchases).

Over a year, the annual interest rate (assuming that 3 days at 1000%+ is ony 3/365 of the annual loan) would actually be around 122,000%!! WTF!?

That's it! I quit. I'm starting a bank.

@crashfrog: I have had 2. and 3. happen enough times that I had to take off automatic bill pay for my cars. The deposit would come in on the 1st and before automatic bill pay would clear by the 2nd. After the payments were automated for the 4th, somehow now the deposit doesn't clear until the 5th.

So here I am back to writing the checks again and spending a stamp.

So one way to help with working against this is to set up overdraft protection. I have a Bank of America checking account that used to be charged overdraft fees of $35 per transaction.

Now I have overdraft protection, so when I overdraft it deducts it from either my savings or credit card account (I have it set up for credit card right now because my savings is with ING).

So you just get hit with a $10 transfer fee. And it's not per transactions, it's for all transactions you made on that day. So if you have 10 purchases totaling $30, you'll have $40 charged to your credit card or savings a day or 2 later, rather than the $350 you would have racked up in overdraft fees.

NOTES:
-Obviously this is not ideal, still.
-If you set it up from your credit card, it's considered a cash advance. Cash advance interest is much higher than your APR, and your company probably applies payments to the balance with the lowest APR first. If you have a large balance on your CC already this could be a problem.
-Ummm screw banks?

@MightyCow: With my Bank of America account I have the option of either using my credit card or my savings account.

You might want to call your bank and ask to make sure...

People still write checks?

Actually Check 21 legislation plays more of a part in collecting overdraft fees than reordering checks. For those that don't know, Check 21 allows for the extronic clearing of checks. Meaning a bank or a company can take an image of a check and send it electronically to be cleared versus snail mail as before. This allows for checks to be cleared same day versus 2 to 3 days like before. People aren't able to kite checks like before so no more buy groceries at Wal-Mart on Wednesday with no money in your account knowing you will get paid Friday. It also allows for envelope free ATM's. When you put a check in an envelope free ATM it takes an image of it and sends it electronically for clearning. The checks collected by the machine are destroyed.

Anyway, I agree with the post above in that if you want to avoid overdraft fees, don't write more checks then you have money for in your account.