Banking: Purchases trigger overdraft fees before they clear

[EV_Ares]

For years, banks have charged customers hefty fees for overdrawing their checking accounts. Now a growing number of institutions are charging customers such fees even before the transaction overdraws their account.
Bank of America and TD Banknorth started doing it earlier this year. SunTrust, among other banks, has been doing it for a few years.

Here's how it works: If you pay with your debit card, some banks will now charge you a fee — $35 or more — if you don't have funds in your account at the time you sign for the purchase.

Previously, you didn't get charged this fee unless you were short of cash when the signature debit transaction cleared a few days later. That meant that, while the signature debit transaction was pending, consumers could often deposit money to cover any potential overdraft. (By contrast, PIN transactions typically clear immediately.)

Leslie Parrish, senior researcher at the Center for Responsible Lending, argues that this is "another way (for banks) to manipulate account holders' balances to spur more overdraft fees." Banks defend the practice, saying it provides customers with accurate information about account balances.

Link: http://www.usatoday.com/money/industries/banking/2008-08-03-bank-overdraft-fees_N.htm

[marmar]

1. In the process of f**king us over, the banks are going to f**k themselves, too....

.... May all the greedy bastards rot.

[rox63]

2. If I don't have sufficient funds when I use the card

They can't usually get the authorization code for transaction. I've assumed for the last few years that any credit/debit transaction is instantaneous.

[woodsprite]

3. We just had an incident where our mortgage

is automagically taken out of our account the last day of the month, except for some reason in July, they took it out July 30th instead of the 31st. That CAN happen when the last day falls on a weekend, but it didn't, so we hadn't transfered that money into our checking account yet. We got an additional $5 charge. Totally pissed hubby off.

This is the first month that's happened since we've owned the house and been paying the mortgage that way, so it sure sounds like a change on the Bank's end - nothing changed on ours.

[rox63]

5. Ok, I was talking about retail purchases

Automated withdrawls are another matter. I use an online bill-payer. But I always choose the date, rather than letting the bank choose it, for exactly this reason. Most for-profit banks are money-sucking pigs. That's why my bank accounts are all with a credit union, which is a non-profit.

[knitter4democracy]

4. Another reason to stick with our good credit union.

They don't pull this kind of crap.

[rox63]

6. Yep, credit unions are the way to go, because they are non-profits

:)