I think what people object to is that the banks seem to make most of their money, through service and penalty fees, from the poorest customers. What’s more, transactions on the same day are usually sequenced with the largest first, which results in more overdrafts and overdraft fees.
To the OP: I went through a time when I was frequently overdrawing my account, and I agree that it sucks to be charged $80 in fees for a $40 transaction. On the other hand, at least you can be glad that the fees don’t go up in proportion to the size of the transaction.
I don’t deny that it happens, but people should not spend money that they don’t have. I’m pretty poor myself–I just don’t spend money I do not have on things I don’t need.
I have all the sympathy in the world for people who want things they can’t afford–I do too. But 9 times out of 10, the problem can be prevented by better budgeting.
Holy shit, I’ve bounced checks in my day, but I’ve never blamed anyone but myself. WTF? I did it because I’m a stupid fucking ninny who doesn’t keep good track of my receipts and usually I get down to about $15 in my account, think that’s how much I have, and charge $10 worth of gas on my card. Then the $15 charge from the store that I forgot about comes through and I bounce it AND the gas charge.
Why? because I’m an irresponsible idiot! Not because the bank is evil! Now I owe $60 in overdraft charges. I’m a moron, that’s why.
Lately I’ve been doing better, though- I get an envelope and put it in my wallet. Everytime I charge something to my debit card, I- get this now- PUT THE RECIEPT INSIDE. If I buy something on Amazon.com I write the amount on the outside of the envelope. Then…wait for it…I call up my account online and I see what has cleared and what has not! THEN…I do this crazy complex math. I SUBTRACT the amount of uncleared transactions from my stated balance. Then I know how much I have left! And I throw away the cleared reciepts or cross the total off of the envelope. Magic!
Before I started doing this and was still an overdrafter, I stopped using my checking account altogether. On payday I withdrew my money (less $10 for fees) and paid all my bills via money order. Guess what? Never an overdraft and the evil banks left me alone.
Maybe it IS rocket science. Those evil bastards, forcing me to use their service. There ought to be a law.
Nocturne, Thanks for the clarification, though I must admit that I am a little fuzzy on a few things.
For example, say bank A (my bank) and bank B both have the receiving software for Check21 (did not know the term for it). Both banks use this software to immediately clear funds for merchants. This implies (obviously) to me that technology exists to send to the receiving software.
Now we have established that it is in the interest of banks to make money. Why would bank A not sent to bank B at once if I make a deposit. Wouldn’t that give them that much more time for my money to be working for them? If the money is there (in the account at bank B) and the technology exists to release it to me at once, why is this not happening?
Perhaps you read my first sentence, where in fact I said that I don’t fuss about my bank charging an overdraft fee if I overdraw my account. And yes, this thing WILL be paid for, because I have overdraft protection on my account. I’ll have to pay a fee, but that’s better than the alternative.
So: I’m not relying of float time, because there isn’t any to speak of, so it’s not going to exactly “bite me in the ass”.
All that aside, there is still no excuse for a bank to charge TWO overdraft fees on one transaction.
And all THAT aside, your post just sounds bitchy, and I’m not sure I understand why. What’s it to you?
Friday: $90 in account. ATM Withdraw $25. Balance: $65
Saturday: $65 in account. ATM Withdraw $20. Balance: $45
Sunday: $45 in account. ATM Withdraw 100. Balance: -55
Monday morning comes. The bank processes in the following order:
Sunday: 100. Balance -90! Smack $35 NFS fee
Friday: 25. Balance -115! Smack $35 NFS fee
Saturday: 20. Balance -135! Smack $35 NFS fee
plus, if we had the OP’s bank:
Sunday: 2, non-bank ATM withdrawal fee. -137 $35 NFS fee
Saturday: 2, non-band ATM withdrawal fee. -139 $35 NFS fee
Sunday: 2, non-bank ATM withdrawal fee. -141 $35 NFS fee
That would be $210 in fees for a transaction that would only have ONE bounced check if the banks did the electronic transactions in chronoligical order. Now, what happened to me did not involve the additional $2 non-bank ATM fees. When I fucked up, I KNEW my last withdrawal was going to bounce, but I was willing to swallow the $35 fee. I knew my balance on Friday. The ATM receipts refelected the correct current balance when I made my withdrawals (i.e. after Friday’s withdrawal, it said $65; after Saturday’s withdrawal it said $45. When Sunday came, the starting balance was listed as $45 on the receipt, and I knew I was overdrawing. I have always accepted responsibility for that NFS.)
So even though I was aware of my balance every step of the way, I still got screwed.
This one I can explain. Just because you made the transactions (buying gas on Friday and a book on Saturday) doesn’t mean the store sent the transactions to the bank for processing the same day. But an ATM withdraw from your bank will process the same day, or next business day, depending on time of withdrawl. So it’s very likely that the $200 withdraw got processed before the gas transaction or book sale. That’s not the bank’s fault - they can only process it when it comes to them from the store in question.
In your second example - why would you even do a withdrawl for $100 if you know you only have $45 in your account?
It might seem that way, but in reality, banks make their money in two basic ways:
Fees
Investing money on deposit and collecting dividends/interest/etc.
For customers who chronically maintain a low balance, where money goes in and out almost instantly, the bank can’t make any money on that customer unless they assess fees. For customers who maintain a balance in their accounts and aren’t in constant danger of overdrawing, they get the dual benefit of not incurring overdraft fees, and usually don’t have monthly serving fees either (if a minimum balance is maintained). On those customers, the bank gets the advantage of using the customer’s money to make money for themselves.
bodypoet, I didn’t mean anything personal, I was just trying to use your “life happens and sometimes you have to spend money you don’t have” to illustrate a point, but I was in a hurry and did it badly. This topic comes up repeatedly here and I’m continually amazed at how many people seem genuinely shocked and enraged that banks actually want to make money off of their customer’s irresponsibility.
Perhaps this attitude has come up in other threads, but aside from the “mugging” post I am not really seeing it in this one.
For the record, I am not against the banks charging overdraft fees. My only issues are that if I write a check that clears immediately than my deposits should be available immediately. Also transactions should be cleared in the order received.
I am not suggesting that people abandon their personal responsibility, and I am not suggesting that banks not be allowed to make money. Honest.
Why would I want to make a withdrawal for $100 knowing I only had $45 in my account? Put it this way, at the time it was worth it for me for pay $35 for a $100 transaction. I have my reasons, but certainly you can imagine a scenario in which a $35 fee is an acceptable price for an urgent transaction. That was factored into my decision-making process. A $105 fee, however, was not reasonable for the urgent money and I would have sought funds from elsewhere.
And this is precisely my position, as well. IIRC, banks (at least mine) processes withdrawals before deposits, so even if I had deposited a grand in cash at the ATM on Friday night, I’d still be screwed with all those fines.
Nobody is saying that people should be able to float checks, or get away with the consequences of not balancing their checkbooks, or otherwise take advantage of the system.
What scares us is how out of porportion the fees are. A bounced check doesn’t represent $60 or even $30 of work for anyone. You can’t tell me that someone sits there for six hours, or even one hour, working on my check. You can’t tell me they could have made $30 off the twenty bucks they loaned me. The fees don’t represent anything in reality.
And there are no theoretical limits to them. You can lose hundreds and hundreds of dollars just from a weekend’s use of a debit card. You can have hundreds of dollars automatically taken from your bank account with no notice or warning. A slip up or lack of knowledge (I had no idea they processed what you withdraw first) can cost a huge amount of money and that can just keep compiling.
FInally, we arn’t given fair warning. We arn’t given clear pamphlets about what fees we could be charged on what occasions. Most of us have a vague idea that our bank charges fees for stuff, but few of us can really give details. That wouldn’t be such a problem, execpt that the bank can withdraw these charges without you realizing it until much later, and during this time you can accidently run up huge charges.
I get what you’re saying, but let me clarify maybe a bit for you:
If Mrs. Smith banked at the same bank I did (let’s say First National) and wrote me a check on her First National account, and I put her check in my personal account, the check would clear the next day because we’re at the same bank, and there’s only one proofing department to go through. Furthermore, I (as a teller or proofer) am able to tell via software if Mrs. Smith has the money available in her account for you to deposit that check and have it clear. Same bank-to-bank transactions never fell in the check-holding window.
However, if it’s BankA–BankB transaction, there are two proofing departments to go through. First it goes through the bank where the check was deposited, and then the Bank where the check was written. However, most checks will still be available next day anyway.
There are only a few situations in which I had to hold checks. Usually, even if the system flagged an account for holding, I could check the account, see that there was really no reason to hold the check (there was a complicated matrix system in the software) and just let it be available next-day. Government checks were always available next day, as were USPS money orders, and generally so were payroll checks. I was advised never to hold loan checks, reimbursement checks, or payroll checks–because you MADE that money, you should have it.
However, if it was a personal check, and you overdrew your account a lot, had suspicious or illegal activity flags, or the check was an exorbitant amount–I would hold it. There are other holds for states-of-emergency but those never really apply, and would only apply in case of terrorist attacks/media outages/ground war in the US.
Don’t get me wrong, I didn’t like to put checks on hold, but sometimes I had to do so. The technology in the US in the financial world is very behind-the-times, I think–but you have to deal with it, and there are reasons besides the fact that the banks want to make money off overdraft fees.
Actually, I had anticipated the monthly service fee. I was careful. I knew that it was coming and planned accordingly. It was the second fee that I had no knowledge of.
Beyond that, I had no knowledge of the banks policy of letting people overdraw their accounts. I figured that if the money wasn’t there, I wouldn’t be able to withdraw it. Seems like kind of a no brainer to me. You can feel free to tell me where I’m wrong about that one too.
In fact, if there is anything else that you’d like to tell me about my personal habits, feel free.
Keep this behavior up and I’ll take back that cute remark.
I have a great system of balancing my checkbook so that nothing bounces. My ability to figure out the Yen/US Dollar exchange rate is not as good. When I was in Japan two years ago, I tried to get the yen equivalent of $170 from the ATM. Doing the conversion wrong, I punched in that I wanted $170,000. It was denied (duh!). My next bank statement included a fee for trying to get more money that I had. Note to self: can’t get $170K out of the ATM.
About two weeks ago I got a letter from my CU. It was notifying me that unless my combined total was over $500, I would be charged a monthly fee of $5. I called the bank and explained that my accounts had a combined total of over $500. She tried to explain to me that since they have separate account numbers, they couldn’t be combined as meeting the required $500. So I asked her if I could change the account numbers to one number, thus having the required combined total. She said that since they were separate accounts, they had to have different numbers. I told her I didn’t understand and I wanted to close the accounts. She said there was a difference between closing the account and withdrawing all the funds. (Hmmm…would that difference be the $5 monthly service fee?) I told her to close the account. I asked if they would send me a check or if I had to come down to the branch. She replied, “We’ll do whatever you tell us to do.” Really? How about you…
Actually, many banks let you have an overdraw “window.” Let’s say you have no money in your account, but your window’s 100 bucks. If you write a check for $20 that you don’t have, it will be paid out by the bank. But they’ll expect you to pay them the 20 bucks back, plus whatever NSF they slap you with for it.
However, if you wrote a check for 110 bucks, that check would be returned to the store unpaid, and you would have to deal with the consequences of a bounced check, which is much worse for your credit, IIRC, than an NSF fee.
So yes, you can withdraw/write checks on your account within your “window,” but anything after that will bounce.
No, it wasn’t - which is why I posted it as a direct quote. Here, I’ll quote it again - it was post #34
It was to this post I was explaining that ATM transactions at your own bank and purchases using a debit or visa check card are treated differently. Thus purchases you make on a Saturday might not actually be withdrawn from your account until 3 or 4 days later, sometimes even longer depending on when the business puts through their credit/debit charges. Which is why you can not depend on your ATM slips (or even an up-to-date online statement) for an accurate account balance because it doesn’t know what transactions are pending (via check, debit, or visa check).
No one is trying to tell you anything of the kind. The fees do represent something in reality: a punishment for mismanging one’s funds. If the penalty was too low then very few people would sweat being overdrawn and more people would do it, thus creating an issue for the bank(s). It’s set high enough to, hopefully, make it enough of a deterrent against being overdrawn.
Dude, I’m obviously hallucinating. That was my post. The $20 gas charge was an ATM withdrawal at the gas station itself. None of the transactions over the weekend involved anything but ATM charges.
Here’s my point. How the fuck am I supposed to know the ins-and-outs of the banking system as you do? Obviously I have learned the rules since, but I don’t think it’s reasonable to expect me to know all the accounting procedures.
When I take out money from the ATM, I assume what happens is the machine contacts my bank. It checks how much money I have. If I have enough, it puts my transaction through.
Now, explain to me, why—with the miracle of technology at our disposal—why isn’t that transaction instantly recorded? I don’t think I’m expecting too much. The two computers are shaking hands and commmunicating. The transaction IS recorded by the bank (since my next withdrawal on the weekend reflects the previous withdrawal.) The ATM is continually, througout the weekend, reporting to me the correct balance. It knows how much, where, and when I’ve made all my transactions. There is no logical reason why the bank must reprocess all this information on Monday. None. It’s completely arbitrary.
