Quote:
Originally Posted by Skogen
This is caused by the banks over draft policy. Banks used to pay the biggest check first using availible funds up, and then charge a over draft fee per item for every check after that. They had no limit.
New laws are in effect. Banks now have to pay the smallest items first and the return the larger items (if you become over drawn).
Many community banks have a max on how much they can charge you in over draft also.
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I thought the problem was that Bank of America was they were processing larger payments and debits out of order sequentially and BEFORE credits...
i.e.
You have $500 in your checking account on a Thursday.
You deposit your paycheck for $500 on Friday, after work.
You buy $50.00 worth of gas on Saturday morning (950 left)
You buy two video games at $60/piece on Saturday afternoon ($120 purchase, $830 left in the account)
And then you cut a check for your rent for $700 and give it to him on Saturday afternoon, after which your landlord promptly deposits first thing the following Monday morning.
You should have $130 left in your checking account at the end of the day Monday after all transactions are processed.
Let's argue that you have a $150 minimum balance. In this scenario you get charged the nominal amount for being below the $150.
That's 1 fee charged
i.e. this is how most reasonable people would assume that the transactions would occur since these are in chronological order
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What actually happened was that BOA was processing your funds in the following manner:
Opening balance after the weekend (described above) = $500
Process the check for $700 rent first, negative $200 balance - overdraft fee
Process purchase for $120 of videogames, negative $320 balance - overdraft fee, insufficient fund fee, (and there was another one)
Process purchase of $50 worth of gas, negative $370 balance - overdraft fee, insufficient fund fee, (and the other one I can't remember)
Then process your $500 paycheck deposit, now have a positive $130 balance and get a fee for being below the minimum account balance.
AND they have still yet to deduct the fees (because I can't remember the amounts) but you have 3 OD fees and 2 insufficient fund fees, in addition to 2 other fees I can't remember AND the fee for being below the minimum account balance.
They could STILL pull you below your +$130 balance. which would result in you being dinged AGAIN for overdrafting AND being below minimum account balance.
That's a minimum of 8! 8! Fees
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Now I thought laws were passed to ensure that the activity on an account was processed in CHRONOLOGICAL order i.e. every transaction is time stamped so process them in that order.
I could be wrong, but after this debacle in the banking industry in the last few years I do a few things:
1. Bank only with those institutions that process the transactions in chronological order (before the law made them)
2. Always keep some buffer room for my purchases/bills in my checking account
3. Have a checking account that has no minimum balance
4. Turn off overdraft protection - make sure the bank/cc company will just "DECLINE" the purchase just to make sure. (if you're out of money, you're out of money)