Held deposit question - overdrafts?

Factual Questions
1

Beginning of story - current bank balance: -9 dollars and change.

I have a problem, where I deposited a large student loan check into on my bank on Saturday. They informed me that there would be a hold on it, since it was a large, out of town check. Ok. The lady said she’d call me on Monday informing me how long the hold would be.

I go home, and check my online bank balance. The balance displays that there’s negative 9 dollars and some change, but the “available balance” is some gargantuan number that my bank account rarely sees. I’m used to this phenomenon, because my paycheck is direct deposited, so I see the same thing with a larger “available balance” while my deposit is going through.

Cool, I say, I should be able to spend this money then! I start paying some bills, which is what I got the loan for to begin with. The payments go through. I use my debit card a couple of times, for things like groceries and Waffle House, no problem.

Monday, I try using it to buy a pair of shoes, because mine got soaked pushing carts in a thunderstorm. (Thanks, W*M!) No go. I go home, and there are over 200 dollars of overdraft fees on my account. I send a message to my bank about it, and they still haven’t responded. I visit the branch on Monday and ask about it, and they answer an unrelated question about how sometimes you buy two things in one day and they both clear, leaving you overdrafted. When I clarify, they suggest that I ask some other lady, who isn’t there that day.

So, given this bank’s less-than-stellar history of communication and hassles I’ve dealt with them, I plan on closing my account when all of this is sorted through.

FINALLY, THE GQ(s): I’ve read up on Check 21, and it seems that the bank is within rights to hold my check for 5 days (they say the funds will be available on the 25th, which is much later than the 16th that I made the deposit), but do I not have any recourse for the overdraft fees, when I had the money? Why would they hold a check from Chase, which is probably more trustworthy than the local hometown bank I’m using (other than the obvious fact that they’re drawing interest off of it for a week and a half)?

Thanks, guys!

2

They put a hold on the funds to make sure the check clears without being returned for insufficient funds. It isn’t the bank it’s drawn on that matters, it’s the account it’s drawn from that does. The hold helps the bank avoid check-kiting schemes. In reality, the hold periods are left over from the days of manual clearing houses; in today’s computerized world no bank fails to know about the situation in more than three days or so.

If the bank showed the funds as available, you should be able to assert that the bank has to eat the fees for overdraft. It was their job to properly put the hold on the funds; their negligent failure to do so should not cost you squat. Politely point out that you wouldn’t have spent anything if the funds had not showed as available.

3

Go to the bank, talk to the manager, explain what happened, and be adamant in your stance. I tend not to bitch about penalties, but I contest almost every overdraft fee I get. Out of probably 15-20 overdraft fees I’ve accrued, I only had to pay two of them. You have nothing to lose contesting the fee and speaking to a higher-up and chances are, especially if this is your first offense, the bank will waive it. As to the GQ part of the question, I don’t know.

4

I don’t suppose you had presence of mind to print that page showing an ending balance (as of last Friday) of -9.00 and the available balance of more?

This is an interesting situation. Their own online system showed funds available contrary to standard practices of holding all but the first $100 of the deposit. You were told there’d be a hold on it when the deposit was made, so the bank satisfied that particular requirement. I’m not sure who will prevail - you, based on the bank’s website saying the money was there, or the bank, based on well-known practices of putting holds on deposits.

If they hold it until the 25th, that’s only five business days, and your funds are released after those five business days - another holdout from the days when paper checks roamed the earth with dinosaurs. We’re processing 24/7/365, and have branches open on Sundays at grocery stores, so there’s little more than the massive internal inertia keeping banks from changing 5 business days to 5 calendar days.

5

Gosh I don’t miss that aspect of being an 18-year old. Now that I’m 30+, if I need holds released on my checks, I just call up the bank and ask them.

6

Your bank has crummy programmers. That deposit should have never shown up as “available balance”. The available balance should have increased by $100 the next business day, and by the remainder of your deposit in 5-7 business days.

Head to the bank: explain, plead, and, if necessary, beg. As mentioned, if you have a good record, you can probably talk your way out of the overdraft charges.

7

They put a 5 day hold on your check. The 16th was a Saturday, which is not a business day for banks, and the hold period started on Monday the 18th, and ends on the 25th, 5 business days later. The check was not from Chase, it was from someone who had an account with them, and they couldn’t verify the fund I assume.

Now, are you sure that you aren’t mixing up the available and current balances, and that the -$9 was in fact under available, not current? If so, try to get some proof to help your argument.

I’m also surprised that they had no way of determining the hold on the spot. It’s usually electronic and based upon routing number.

8

Even more likely, it was a PTD or payable-through draft. Drafts look like checks and smell like checks, but they’re not checks and have some rather different payment characteristics that are largely invisible to consumers, but are important to banks.

Essentially, the money comes from an entity other than a bank, but to make life easy for us in the real world that might receive one, they’ve made arrangements with a bank to handle the mechanics of payment - when a draft arrives at their bank, the bank signals them and says “Do you approve for us to pay this?”

9

Just out of curiosity, does being a certain customer profile make a difference? I’ve never had a check held, even back when the account was new and I constantly deposited expense reimbursement checks. In fact, I could go deposit a check now, come right back, and see my entire available balance credited that fast. Per the OP, maybe it’s just Chase that’s not being unreasonable.

10

It depends on the bank. My credit union will cash a check for me (from someone else), regardless of the balance in the account. (I’m sure there is a limit, but it’s larger than I’ve ever tried)

I’ve also walked into a bank with an expense check that was drawn on that particular branch. They wouldn’t let me cash it, but were more than happy to allow me to open an account, and wait X days for it to clear. - Probably the PTD bit that **gotpasswords ** refers to.

I’d usually give them my personal account number, which has money in it only when Mrs. Butler decides that I’m ok to have more, and transfers some from “our” (read HER) account, to “my” account. :smiley: (I jest, all I have to do is ask… usually.) While we both have access to both sets of accounts, there is no direct link between them.

11

You didn’t have the money. The bank informed you verbally at the time of deposit that there was a hold. I think you would have a valid complaint if the bank did not disclose the availability policy properly.

I don’t know what Check 21 says, but it is Regulation CC that lists the requirements of availability of funds.

The question to ask is did the bank follow it’s availability policy in this case? They did have until the next banking day (Monday) to do this. Did they call back and tell you the hold period on Monday?

Also, although the bank may be open on Saturday, it is not a banking day. Banks that I’ve been to are pretty clear on stating that deposits made later than a certain time on Friday (usually 2:00 pm) will not be posted until the following Monday. If that is the case at your bank, you were wrong to try to spend that money before Monday even if there was no hold.

12

The credit union to which I belong definitely does use customer profiles and will adjust the amount immediately made available for an ATM deposit. It isn’t always an even amount, like $500 or $100, but could be, for example, $502 on a gross deposit of $700. It all varies depending on whether you’ve overdrawn your account or not, how often and by how much, or if you have had any problems with deposits before, like when somebody’s check to you bounced.

13

Wow, so many questions/statements. To address, and then tell the shocking finale of my gripping story:

The check was sort of from Chase. It was a student loan issued through them, serviced by a company called TERI, with a routing number from a bank called Fleet National, with “Bank of America” printed on the check.

I actually have a terrible customer profile. I overdraw my account probably once a month, at least on average, and my balance doesn’t ever really hover around more than a hundred bucks.

So I went down to the main branch today. Manager’s in a conference. Whatever. I speak to one of the nice guys at desks (which makes them higher up than the tellers?), and described things to him. He reversed the overdraft fees, no problem. I then asked if we could call the bank and get them to verify the funds so they could release the held money, and he tried. He looked in this big book of banks, and explained the complexity of the different things going on with the check, and called a couple of numbers and didn’t get anywhere.

Manager comes back, I go speak to her, she goes through the possible scenarios with me (me being sent a fake check, asked to wire some of the money back to company, company bounces check), etc, and then I show her where on Chase’s website I applied, and she finally buys my story, and then decides to release all the funds into my account! Yay! I can now go on a bill-paying spree. Which is what I was going to do to begin with, but now I get to do it earlier!

14

Congratulations!

See what I mean about PTDs being a bit tricky for banks? You walk in with a slip of paper that looks like a check, and your bank puzzles over it and says “Where the *heck * is the money coming from?” At least the Fleet and BofA bit is easy to explain - BofA absorbed Fleet about a couple of years ago.

15

Hm - with everything done electronically, how does this work - if I have a PND direct deposit coming in, and an electronic debit PND going out on the same business day - I noticed this kind of thing won’t show up for a couple days on my electronic statements. But is this a faux pas, then??