Banks don’t believe in first come, first served, when it comes to processing your transactions. Instead, it’s biggest appetite, first served. In other words, they process a batch of debits on your account by order of largest to smallest. The result, critics, and now, several lawsuits, charge that it maximizes the overdraft fees they can harvest.
Banks defend the practice by saying 1) the contract says they can process transactions in any order they want, so neener-neener and 2) most people’s biggest checks are for their mortgages and medical bills and they’d rather their customers bounce a check for a candy bar than for their house. Of course, people should be keeping track of their balances using tools like my awesome free excel budget sheet, getting their balance by cellphone, using all-in-one personal finance management tools like mint.com, or a slew of other tools, but the policy does hurt the less-sophisticated or simply momentarily forgetful. The multi-state lawsuits are getting consolidated and seek class action status.
Wachovia, BofA, Citibank Sued Over ‘Bad-Faith’ Overdraft Fees [Law.com] (Photo: freeparking)