Confessions of a Laid-off Lawyer

Just Your Average Joe Blogging Away His Debt—In One Year or Less

What is This, Sarcasm?

with one comment

Total Black: $10.99
Total Red: $228,519.06

So that $20 I donated to Coalition for the Homeless?  It’s going to end up costing me $55 once the insufficient funds fee is tacked on.  Best laid plans, eh?  But sometimes you just have to laugh.  It may be the laugh of the absurd, but it beats crying.

One of my student loans is set up on automatic debit each month.  It’s only about $100 a month, so I figured I’d let it continue.  It posts on the first of the month.  Well, I forgot that today is the 1st of September.  Unless that $20 donation and a few other transactions remain pending until tomorrow, sometime after unemployment gets paid, then I’ll be hit with about $130 in insufficient funds fees.  See, Bank of America posts its transactions from highest to lowest.  There’s been a few lawsuits challenging that practice, alleging fraud and misrepresentation.  It only happens with debit cards too because if you go over the limit on your credit card, you’re not charged typically unless you remain over the limit after that month’s statement closes.  But with debit cards, the banks view it as if you wrote a bad check.  And regardless of the timing of your purchases, my bank still posts them highest to lowest.  Here’s how it works.

Say, for example, your monthly cable bill payment comes through at $50.  You forgot it would come due.  (Seriously, who still uses that back-of-the-checkbook ledger to write down every coffee or gas purchase they make?)  You’ve only got $30 in your account though.  “Damn!  It’s going to overdraw my account,” you think.  “I’ll get hit with an insufficient funds fee.  But it’s only a few days till payday.  I can swing it.”  But that’s where you’re wrong.  At least if you bank with Bank of America.  See, if you add back in the $5 you spent at Starbucks yesterday and the $10 you spent at the grocery story the day before that, both of which are still pending, then you’ve got a total of $45 in your account.  (Not that you could walk into a bank and have a teller pull that much money out of your account.  But the banks get to engage in that sort of voodoo accounting.)  But then comes your cable bill payment, and even though the bank has already given you authorization for those two purchases—otherwise your debit card would have been declined—it shuffles the transactions around and rearranges them from largest to smallest.  In doing so, it moves the $50 cable bill payment to the top of the list.  Now—using voodoo accounting—the cable bill at $50 puts you in the red by $5.  That means it’ll bounce.  But it also means that the $5 coffee and $10 worth of groceries that you already paid for and already received authorization for, those two will also now “bounce.”  So instead of one insufficient fund fee for the cable bill—because you were initially in the black by $30 before it came through—the bank now charges you three insufficient fund fees because you’re in the red by $15 now due to the way the bank rearranges your transactions.

Typically the answer to that sort of customer service is to take your business elsewhere.  I noted in a prior entry, Buy Me a Beer?, however, that when you’ve got less-than-stellar credit, that’s not really an option with credit cards.  But here it’s a bank and checking accounts we’re talking about.  So, after nearly seven years of enduring this type of customer service, I’m getting on the telephone today with Bank of American to find out if—by some remote chance—I have options as to how my transactions post.  And if I don’t have any choice, then I’m pounding the pavement today with a print-out of these shenanigans and finding another bank that doesn’t treat its customers this way.  Wish me luck.

One Response

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  1. I have such a love and hate relationship with Bank of America (sort of reminiscent of my current relationship with HU). Last month I found out the hard way they charge an additional $35 dollars after five consecutive days of a negative balance in your account.

    I would like to switch banks, but they make banking so easy and convenient. Plus they have one of the most secure online systems at the moment.


    September 2, 2009 at 00:49

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