I don’t think anyone is doubtful about the bank’s intentions; they make the lion’s share of money from personal banking off of fees charged to customers.
At the same time, they have a legitimate point that you shouldn’t cut checks that you don’t have the money for, because it can result in the bank either having to bounce the check or pay out to cover the difference. They don’t generally like to do this as some unsavory types will overdraft a bank account by a few hundred dollars and then refuse to pay it off. (This makes it difficult to impossible to open a new bank account, but some people live off the grid for awhile.)
Remember way, way back when Mike Moore had that TV show? He did a segment on that, going around trying to get banks to tell them how much they made on this practice. As I recall, some tried to claim they don’t keep records on that, don’t have the figures.
This was originally enacted as a consumer protection plan, actually. The idea was that the largest checks were things like rent and utilities. Processing them in the order you give ensures that if a check is going to bounce, it’s the $5 check to Mcdonalds, not the check that will cause you to get evicted or have your water turned off. Or, at the very least, get your credit dinged.
Yes, the net result nowadays is that they collect more fees, but that wasn’t the original intent. It was done for your benefit, not the banks.
@Hal Briston: I’m not sure I see the problem. He had a business checking account with a monthly fee, they left it idle for years with no money going into it. What did they expect to happen? It’s not the bank’s fault they chose to leave money sitting there. What, they were supposed to stop charging the fee he agreed to?
Banks are a business, yet everyone seems to expect that for their piddly $500 checking balance, they are entitled to free checking, free checks, free atms, free debit cards, free online banking, etc. Believe it or not, your $500 checking account is a liability and burden, not an asset to the bank. They offer it as a means to get you in and sell you products. If you aren’t buying those products, they need some way to stay in business. Fees are one of those ways.
That is such complete and utter bullshit - tell us it’s none of our damned business, but don’t try to pretend that you don’t keep track of money in a bank. Isn’t that kind of what they DO?
I hate to get all factual in a Pit thread but the Check 21 act is was the beginging of the problem.
Many outdated check practices were eliminated. Paper checks now can be processed much the same as a debit card. Indeed, the only float time left is the time the check spends in the mail.
You shouldn’t write any check that will not immediatly clear. And I am* shocked, shocked * I tell you, to find that banks have worked this simplification of check processing to their advantage!
No they will send you a statement saying you owe them money. I had it happen when I was ill and it was a zero monthly fee account with a couple bucks in it, before they wanted $75 bucks in overdraft fees from me.
I’m almost scared to post in this thread, seeing as how I’ve worked in banking for a few years now. Then again, the (small, local) bank I work for doesn’t follow most of the fee policies of other banks. (For one thing, if you have $500 in your account, and a check you’ve written for $1000 comes through on the same day you have an $800 dollar deposit–you end up with $300 and no OD fees.) We also only charge $1 a year on inactive checking/savings accounts, and to be “inactive” you have to have not used the account in 36 months.
However, I did work for a very large bank (that sort of rhymes with “Segovia”) and they were right bastards about fees. I was relieved when I got a better job and could leave there. I was even more relieved when I closed my own checking account there.
A long time ago I use to have a Bank of America account. I gave it up because there were many times where I would deposit my paycheck (I didn’t have direct deposit), then I would use my debit card or write checks and have them go through first, so I would have to go to the local branch with my ATM receipt in hand proving that I made the deposit first before making any of the withdraws. That got old really quick.
I get that from my UK bank, and they are a hugely profitable entity. Well, I don’t know about the cheques, haven’t needed to use a personal one for many years. They must be doing something with the money I’ve effectively lent them.
I don’t get you guys defending this. It would be one thing if we were talking about processing stuff in the order you received it. That at least has some sense of fairness. But what is being decried in this thread is the practice of ignoring all deposits until after the checks for that day (or even longer) have cleared.
It’s part of the reason I currently do not have a bank account. I don’t earn any interest, so what do I get out of it other than people being shitty to me? A less than 1% fee to cash a check is a lot better use of my money than having to worry about people using any excuse to take my money.
If my partner deposits a cheque in her account and it bounces, both she and the person who wrote the check get charged $35 ‘dishonour fee’. I made her ask them why she was charged as she hadn’t done anything wrong, they said it was her responsibility to make sure the cheque was good before depositing it.
Oh, she said, can I get their bank balance before I do that, to make sure as you say?
No, of course not, privacy!
Ummm, OK, so how do suggest I do that?
That’s up to you.
Bastards. She must not have been the only one who complained as they dropped it to something like $5. But still kept the money they raked in up to that point. Bastards.
Back in the 70’s and 80’s I worked in banking back office bookkeeping functions. At that time it was the common practice to post credits first. Then to post debits with the smallest debit being first. That way if there was an overdraft, it only affected the last debit in line.
In about the mid 80’s banks began to scratch and dig for every dollar of fee income they could. And they quickly found that if they posted debits first and the largest debit first of all, they could really ramp up fee income. It very quickly became a disgusting game of who could come up with the highest NSF fee and apply it the most times in one day to a single customer.
Not anymore. BofA just settled a huge class action suit over that, and I gather all the banks went back to processing withdrawals in chronological order as a result.
I’m surprised by this, actually. Of all the banks I’ve been with in my life, none of them have ever processed debits before credits. I’m kind of shocked to see that others have experienced similar policies… I would suggest packing up and moving to another bank if that’s the case. I’d be happy to recommend a few good ones.
Although, the processing of larger transactions before smaller ones is something I’ve always experienced. I hope the last poster is correct in that most will be switching over to chronological processing, simply for the sake of fairness.
I just paid property taxes online last week; I had the option of using a credit card (for a 3% fee!), or using an eCheck. I chose the eCheck. It has yet to come out of my account. Go figure.
This happened to me too, after I thought I had closed an account, but I had moved so I wasn’t getting the bills. About three years later I was trying to get a mortgage and my credit report showed a bad debt from TD Canada Trust. I went in to ask what the deal was and it turned out that they had been charging me the monthly fee for three years and it was just under $500 in overdraft. Because of the way the contract was worded, and because I had no proof that I’d closed the account, I had to pay it. They did remove it from my credit report, but I was pissed, and I will never bank with those rip offs again.
