Banking Question

[SRW]

Recently banks have been attempting to squeeze as much money as they can from people, one of the sneaky tricks they used was if you overdrew you checking account and did not have overdraft protection, then they would front you the money, at a charge of $35.00 per transaction. Not to bad if you have one transaction once in a while. Right? Well the banks were not satisfied with that so what they did was hold on to transaction and wait for a large one and process that one first then they would be able to clear your account and put you in debt to a tune of $35.00 per trans.

Because of this a new law went into effect on the 15th of August which specified that in-order for the banks to charge you this fee you had to give permission for the overdraw to take place. I wonder how many people not being aware of the practice of clearing accounts signed up for this.

Also if you have joint accounts with your children you may want to get rid of them(the account not the kids). If you have any other account at the same bank, and the kids overdraw the bank can and will pull money from your other accounts.

[SRW]

Forgot to ask the question.

Here is the deal. My wife had a joint account with my daughter, she closed her portion of the account last June. When she had the account open she had a credit card that she used for over draft protection. When she closed the account she told, the manager of the bank, she was doing so because she did not want my daughter to use it for overdrafts.

The manager told my wife about the new law and assured her that without over draft protection unless my daughter gave permission for overdraw the bank would not allow her to draw money(decline the transactions). Every think was normal in July, however after Aug 15, my daughter believing that my wife and deposited a check into her account she signed up for classed bought books, gas etc. She just kept on spending because she was assured that as long as the card was not declined there was money in the bank.


What happened was the bank manager had not taken my wifes credit card off the account. So the bank was taking the money from the credit card and replacing what my daughter spent. We did not realize this until the credit card statement came in late September. My wife did not deposit the check However my daughter spent way over the amount of the check, because every time she check the account there was plenty of money there.

So as the bank manager made a mistake, by not taking my wifes CC off the account, and my daughter only used the card because she was under the impression that the bank would stop the charge if there was no money in the account. Am I obligated to pay back to money to the credit card?

I did not authorize them to make the charges, my daughter had no ides the card was being charged. And the bank failed to inform me or my wife that we were piling up hundreds of dollars in overdrafts.

[ServiceSoon]

A charge of $35 to take a personal loan for not signing any paperwork or following any other prudent steps to assure repayment seems fair to me.

[SRW]

A charge of $35 to take a personal loan for not signing any paperwork or following any other prudent steps to assure repayment seems fair to me.

It would be fair however the way they clear the account to assure that they get the maximum return, can get you in trouble very quickly. Many people are living pay check to paycheck, and even if you over draw by only 1 penny it can add up quickly to a couple of hundred dollars in fees. Lets say your make 3 transactions which will put you at 1c in the red, Knowing you may be overdrawn you rush to the bank and deposit $50. Your statement will not show the overdraw, it will show that you still have the money that caused the 1 cent over draw. They do not show the transaction until you have put enough money in the bank to cover the overdraw fee.

Then you go out and purchase gas and a few other things thinking you have $50 in the bank. But you do not you have 14.99, so you get a hamburger for $5, and some sundry for $6.00 then the next day gas for $25.00. You have just spend $40 for the burger $41. for the sundry and $60.00 for the gas. Sounds like a deal?

[lionking]

All the banks in Australia did the same until one of the big ones dropped the rate from $A30 to about $A2, which was more like the real cost to the bank of covering the overdrawn amount. The rest soon followed suit.

This, however, did not stop the largest class action in Australian history currently underway against the banks for massively over-charging customers. I'm one of those who has signed up (there are hundreds of thousands), even though they only gouged perhaps $A150 from me.

[Sceptic-PK]

It would be fair however the way they clear the account to assure that they get the maximum return, can get you in trouble very quickly. Many people are living pay check to paycheck, and even if you over draw by only 1 penny it can add up quickly to a couple of hundred dollars in fees. Lets say your make 3 transactions which will put you at 1c in the red, Knowing you may be overdrawn you rush to the bank and deposit $50. Your statement will not show the overdraw, it will show that you still have the money that caused the 1 cent over draw. They do not show the transaction until you have put enough money in the bank to cover the overdraw fee.

Then you go out and purchase gas and a few other things thinking you have $50 in the bank. But you do not you have 14.99, so you get a hamburger for $5, and some sundry for $6.00 then the next day gas for $25.00. You have just spend $40 for the burger $41. for the sundry and $60.00 for the gas. Sounds like a deal?

exactly.


NARRATOR: Complaints about Providian from around the country came here to Wallace's office.

PAT WALLACE: Providian, for example, was accepting payments from consumers on their accounts, depositing the checks but not crediting the account for sometimes up to several weeks. What was the net result of that? Invariably, the consumer got a late charge.

LOWELL BERGMAN: They were holding payments so that they could charge late fees and they could charge overdraft fees and—

PAT WALLACE: And over-limit fees. Fifty percent of their income were fees, not interest on the money loaned. They were pushing the envelope. And they got by with it for a period of time, and they made a lot of money.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/etc/script.html

[ingoa]

It would be fair however the way they clear the account to assure that they get the maximum return, can get you in trouble very quickly. Many people are living pay check to paycheck, and even if you over draw by only 1 penny it can add up quickly to a couple of hundred dollars in fees. Lets say your make 3 transactions which will put you at 1c in the red, Knowing you may be overdrawn you rush to the bank and deposit $50. Your statement will not show the overdraw, it will show that you still have the money that caused the 1 cent over draw. They do not show the transaction until you have put enough money in the bank to cover the overdraw fee.

Then you go out and purchase gas and a few other things thinking you have $50 in the bank. But you do not you have 14.99, so you get a hamburger for $5, and some sundry for $6.00 then the next day gas for $25.00. You have just spend $40 for the burger $41. for the sundry and $60.00 for the gas. Sounds like a deal?

As an European I have to state that I do not understand your problem. Your daughter cannot do addition/substraction? That's bad if you are dealing with banks. But it is not a problem of the bank.
Your daughter is spending more than she has? Again, not a problem of the bank.

I really cannot see where the problem is. (Maths education put aside)
For sure all the stuff is in the fine print of her contract with the bank. This leads to the question of reading and comprehension. Again. Not her banks problem.

In short, did you not educate your daughter and try to blame it on banks?

I really do not understand the problem. Actually, I doubt there is a problem. At least not on the banks side. :rolleyes:

[roger]

ingoa, it's a well know method the banks use. Yes, you should be aware of what is in your account. But oddly people expect that the balance that the bank posts is your actual balance. But, it isn't.

The other thing the bank does is hold back on transactions, then orders them in a way to maximize the fines. Say you do 5 $5-10 transactions on day one, then do a $1000 transaction the next day. Unfortunately you miscalculated and overdrew. Yes, it's your fault. Given the scenario you should pay 1 $35 fee. But what the bank does is restructure the order of the debits, and removes the $1000 first. That way they can charge you for 3-4 overdrafts instead of just one. Then the next trick - they use the overdraft fee to create an overdraft fee. Opps, you don't have the $35 to pay that fee? Well, we'll pay it for you, and change you $35 for going over! Aren't we nice!

But what is worse, by playing the ordering game, they can create an overdraft where realistically none occurs. Consider a typical cash flow for a business. Funds are going in and out all the time. You deposit $2000, pay some suppliers, deposit $1850 the next day, pay some more bills, etc. By reordering transactions (placing the deposits after the payments even though the deposit came earlier), they get to charge you overdraft fees. You are being completely legitimate, making sure you always have enough money to cover your transactions, but the bank screws you over.

There's a reason the feds made this law - banks are taking advantage of these fees to create massive revenue streams that amount to micro-loans with interest rates in the thousands of percent, mostly by reordering transactions to maximize the fees.

[SRW]

As an European I have to state that I do not understand your problem. Your daughter cannot do addition/substraction? That's bad if you are dealing with banks. But it is not a problem of the bank.
Your daughter is spending more than she has? Again, not a problem of the bank.

I really cannot see where the problem is. (Maths education put aside)
For sure all the stuff is in the fine print of her contract with the bank. This leads to the question of reading and comprehension. Again. Not her banks problem.

In short, did you not educate your daughter and try to blame it on banks?

I really do not understand the problem. Actually, I doubt there is a problem. At least not on the banks side. :rolleyes:

Oh I admit my daughter should have been paying closer attention, however she was told by both me and my wife who were told by the bank manager that that as she had no over draft protection her card would be rejected.

Part of the problem was she was expecting money to go into her account which did not go in. And the bank was taking money from my credit card and putting it into her account. So it looked as though the money she was expecting to be there was there.

So the bank was making charges on my account to put into my daughters account. Not only did they not have permission to do this they were told we did not want them to do so.

Do you think the bank has a right to use my credit card? They used it without my permission, so why should I have to pay them back.

And they gave my daughter a loan without informing her they were doing so, so she did not have an opportunity to decline the loan until after she had received it. Again after telling her explicitly that if she did not have money in her account her transactions would be rejected.

[Mongrel]

Oh I admit my daughter should have been paying closer attention, however she was told by both me and my wife who were told by the bank manager that that as she had no over draft protection her card would be rejected.

Part of the problem was she was expecting money to go into her account which did not go in. And the bank was taking money from my credit card and putting it into her account. So it looked as though the money she was expecting to be there was there.

So the bank was making charges on my account to put into my daughters account. Not only did they not have permission to do this they were told we did not want them to do so.

Do you think the bank has a right to use my credit card? They used it without my permission, so why should I have to pay them back.

And they gave my daughter a loan without informing her they were doing so, so she did not have an opportunity to decline the loan until after she had received it. Again after telling her explicitly that if she did not have money in her account her transactions would be rejected.

Do you have the equivalent of a Financial Ombudsman Service in the US?
As for the bolded bit, it's probably worth checking the T&C for the account, they may well be able to.

[SRW]

Do you have the equivalent of a Financial Ombudsman Service in the US?
As for the bolded bit, it's probably worth checking the T&C for the account, they may well be able to.

I do not know what a Financial Ombudsman does but I was thinking of filing a complaint with the FTC, which does not really help in the case. I called the Credit Card company and they said that they could not do anything as it is not fraud. Besides the complaint I think my only recourse is to file against the manager of the bank in small claims court. If he had done his job correctly and taken the credit card off the account none of the charges would have gone through. I guess if I win he could sue my daughter but as she lives 300 miles away that would be very difficult.

[Mongrel]

I do not know what a Financial Ombudsman does but I was thinking of filing a complaint with the FTC, which does not really help in the case.


Knew there was something I forgot, sorry. Financial Ombudsman (http://en.wikipedia.org/wiki/Financial_Ombudsman_Scheme_%28UK%29).

[Loss Leader]

I generally like Chase, but I wish to Santa the'd leave me alone about this. Every single time I perform a transaction, the machine forces me to opt out of signing up for overdraft protection. Every time I go to a teller, I have to hear about it. They've called me at my house and at the office.

The ironic thing is that they make clear that they aren't even required to cover your overdrafts and they may choose to do it or not to, at their option, even if you're part of the program.

It's exceedingly bad business ... that will make them tons of money.

[SRW]

I generally like Chase, but I wish to Santa the'd leave me alone about this. Every single time I perform a transaction, the machine forces me to opt out of signing up for overdraft protection. Every time I go to a teller, I have to hear about it. They've called me at my house and at the office.

The ironic thing is that they make clear that they aren't even required to cover your overdrafts and they may choose to do it or not to, at their option, even if you're part of the program.

It's exceedingly bad business ... that will make them tons of money.

I bet that if you opt in to the program you will never hear a thing from them again. At least until they have a chance to clear you account and hit you for big bucks.