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Does EVERYONE'S bank do this...


kidrio
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Hello, I have had a business accout~actually three~at my current bank for 5 years for my business. I have always wondered if all banks operated this way or if something was fishy with mine. I have to make all deposits by 2:00 pm (even cash) for that deposit to be included in that business day's transactions. However, the reconcile all checks after 12:00 am but they count those checks that go through as the previous business day's checks. For example I deposit 1000.00 cash into my account at 2:02. Checks come through that evening (actually the next morning) however the amount is debited from my account on the day I made the deposit, yet the money that I did deposit from that day is not a credit into my account until the next day. So in effect, I should have 1000.00 cash into my account to pay the checks that are came through that night (actually the next day) but it doesn't count. I know that the money is supposed to be in the account when you write the checks, however, this is the real world and other debits go through etc.

The result is my bank loves me because the charge me 33.00 per NSF. I am lucky that they pay all checks~probably because they know that the money is there to cover them, the just refuse to acknowledge it. I have nearly run down small women and children just to get to the bank before 2:00, however, sometimes this is just not possible.

I understand the 2:00 limit, but I thought cash always counted whenever it was deposited during business hours. I just think that if they are going to take the check amounts out of my account at midnight, the money should be debited as such and come out of my account on the next business day. Am I making any sense?

When I asked my bank how they could do this, they said all banks do this? Anyone else have this problem?

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You understand the 2 p.m. limit? Did you know some credit card companies are doing that now. Used to be you had until the end of the business day.

Not any more. Not with the revenue late fees and penalties bring in. Thank the U.S. Supreme Court for allowing that to happen.

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Yes, most commercial banks post deposits as you describe. When you make a deposit ask the teller if it posts on the current business day. If not, the deposit is recorded, however gets processed the next business day. Just remember to check that and you will not incur NSF charges.

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My issue with the bank is that if they won't accept my deposit on that business day, if it is made after 2:00, why then don't they put the checks that go through at midnight on the next business day rather than the previous business day. I usually have 5 to 11 checks go through each night and on Friday, for instance, at midnight (which USED to be Saturday in the real world) the money comes out of my account on Friday rather than Monday (the next business day). If I make a cash deposit on Friday after 2:00, it doesn't credit to my account until Monday. Hence, the rushing to the bank to make it by 2:00 or the excessive NSF fees.

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As far as the 2:00 limit goes, I understand what my bank's response is, however, I completely disagree with it. I hardly ever deposit checks into my account. I have a cash business~a bar~and only deposit cash. I have a HUGE problem with the fact that they will not recognize cash deposits made after 2:00 until the next business day. My bank knows exactly what they are doing. The cash is in the account however, they won't allow it to be used to pay the checks they are posting that day. In 2004 I paid 4500.00 in NSF fees. I never once bounced a check, which is fortunate, however, in every single instance where I incurred NSF fees from my bank, the cash that was deposited that day after 2:00, would have covered the checks they put through that day. When I confronted my bank on this, their reponse was, "I know it seems a little strange, however, all banks do this and you should have the money in the account when you write the check." In my case I do have the money in the account when the checks get debited from the account, however, they won't recognize it. I have looked for any rules that say this is fine or otherwise, but have not found any. Until then, if you see a white Sable driving furiously toward a Century bank around 1:55, I'll try not to hit anyone.

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That was kinda my point. Just because all the major banks do it, doesn't make it right. It's a scam. Greed. Whatever you want to call it.

Do you HAVE to go through this bank? Why not find one that isn't a corporate pirate?

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They are really the only bank that is close to my business and my employees have to make frequent runs there for change. Also, my credit is not the best (am in the process of fixing) so I may not be able to open another corporate account. Another interesting thing about this bank is that you cannot pay for overdraft protection on a corporate account. Why would they want you to have it when they can charge you 33.00 per transaction instead. I am sure if I was a big business like Chili's this wouldn't be happening, but alas, I am just a small pea in the pod.

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Have you ever requested that they apply an IMMEDIATE CREDIT to your account? I have requested this numerous times from several different banks that I had accounts with and they would post the deposit right away, as I would tell them that I had checks that would be clearing tonight or I needed to use my debit card to rent a car, etc. Usually they would take the extra step and post it immediately, especially if it was CASH. Sometimes they would give me the midnight or next day posting speech, however I would just insist on the IMMEDIATE CREDIT to my account, and they would just do it, or check with a supervisor and do it. I have never been denied. They can do it.

That 2:00pm posting time is so early, I'd only heard of 4pm. So I would just try requesting the immediate credit and once they do it just continue to request it.

Good luck!

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Good idea.

You're right. They can and do do it. Other banks do it. I can make a deposit and have immediate access to the funds. Try that with a greedy national institution...

On a side note, I'll never do business with a national bank again. Amazingly, my money is the same color and spends the same coming from a home-town credit union.

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  • 3 months later...

I agree with you about credit unions, love them! I was spoiled by the fact that I am from a military town and only ever did business with a credit union (There were 4 in a VERY small town!) Then when I moved I had to go with a BANK because there are very few CU's around although a much bigger city. I can use my work CU but they only have savings, veh loans, if they ever start checking I will be the first in line.

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  • 2 months later...

It depends on the size of the bank and how advanced the systems are. I've worked for a family owned bank and one of the top banks in the country. Cut off times vary...4 p.m. is pretty standard. The large bank I worked for was a "live" bank. Meaning cash deposited was instantly available. However at the smaller bank, where i started banking, my manager always used to say we were nothing but receipt printers because their way of processing everything (at night) was an old process. However checks never get credited the same day. You can ask for immediate credit but that would depend on the account relationship and whether or not the check was drawn off of the depositor's bank.

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Another interesting thing about this bank is that you cannot pay for overdraft protection on a corporate account.

You can't do that at ANY bank. Federal law prohibits it. Don't ask me why; as a banker I have had many confused business customers over this one. What you can do however is get a business line of credit and tie it to the DDA to prevent ODs. That is, if your credit will allow it. On the other hand, your poor credit should not prevent you from opening an account.

It is also untrue that checks never get credited the same day. That used to be the case, but float laws changed last year, allowing banks to give same day credit on checks drawn on an another account at the same institution. Not all banks have adopted these changes (which were enacted to recognize improving technology), however. If your bank is doing this the checks that clear your account overnight are only getting same day credit if they were presented before the cut off time of 2pm. The checks that are clearing at midnight have NOT been presented after the cut off, whatever it might be; that is simply the time the bank processes all payments received prior to the cut off.

Bottom line - ask an officer (not a teller; most banks don't educate them very well) about the bank's funds availability rules and about how you might qualify for a small business LOC.

Overall, this bank is not scamming you, although its $33 NSF fee is a little hefty. What I do have a problem with is that banks will always clear items in descending order of dollar size. I've gotten stuck with this one myself. What happens is that if you have $1000 in available funds but $1500 in ten payments, but one of them is for $1000, you get nine NSFs even though the nine totalling $500 could all have cleared. Usually though, a bank will waive the multiple fees if you complain loudly enough. If they won't, that's reason enough to switch.

OTOH, there are banks who actively encourage customers to mismanage their accounts so that they can charge fees; these banks are sometimes held up as examples of great non-interest income generators, but are the real scum IMHO.

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  • 2 months later...
Usually though, a bank will waive the multiple fees if you complain loudly enough. If they won't, that's reason enough to switch.

Still have the marks on my back from over $1500 in fees over a month's time. Without too much detail, this happens easily if you don't keep up with your account well, keep a wildly fluctuating balance and have auto-pays scheduled. The bank had a computer problem and I couldn't deposit money in time for the APs. They would not acknowledge their error. It also doesn't help if your husband calls your branch VP a f*ing b*tch.

We switched banks and made a few adjustments in our tracking, but I am not really happy with the bank he chose. Same type of bank policies.

It is a very long road to recovery. You won't find too many sympathetic parties, since the vast majority of people don't really understand how NSF's work. In a different sort order we may have bounced ONE transaction for $32. Once the ball is rolling downhill, you can't stop it. Trying to find someone to listen to you and assist is difficult, and it will take class action of some sort to fix it.

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Federal law prohibits it. Don't ask me why

Not exactly.

REG CC, effective September 15, 1991 set the maximum time allowed for various types of deposits and credits to be posted to DDAs and available to depositors.

After Reg CC became effective, the bank I worked at IMMEDIATELY put in place a hold system that delayed crediting of deposits that previously were available as soon as received, (Cash, ACH credits and Wire transfers.)

They increased their income from Overdraft fees by 20% in one month !

Reg CC was passed to stop overly long hold times on check deposits that were customary in smaller banks and older savings institutions at the time.

(The Reg is outdated especially with the new Check 21 provisions.)

Yeah its mostly greed, but a little bit of the problem is because of processing time and financial accounting on deposits.

If the bank doesn't have the cash on deposit by 2:00 pm they cannot claim that they have the money in their bank to the Fed, and earn interest by investing the money in Overnight Fed Funds deposits. Also, they cannot accurately maintain their reserve deposits.

(This depends on their accounting system and how close they are managing their liquidity. Good banks have better accounting systems and don't shave the liquidity margin so close that a $3.00 deposit will put them "in the Hole" with the Federal Reserve, and incurr a fine.)

The more competetive banks are going to real time online banking and not engaging in this income driven behavior. They are making up for the lack of fees through other revenue streams. ( Actually serving the customer for a profit rather than screwing the customer for a profit.)

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OH right... Now I get your meaning... (definitely a "DAAHHH" moment- sorry.)

You're right Fed Regs do prohibit OD protection on commercial DDAs. (I think thats Reg G or something...)

AS I recall from my Undergraduate Econ Degree and my AIB classes, (I think that was just after the Dark Ages as we moved to Mercantilism,) the existance of Overdraft lines of credit on commercial DDA accounts is believed by the regulators to encourage and allow commmercial kiting and can cause banking collapses. (Just like the First Second And Third Bank of the United States failures, and the Wildcat Banking era of the late 19th Century.) Apparently the Banking regulators know that business people will push a system beyond its intended use for a couple more dollars in income every time. You can make alot of money kiting.)

In the old days, the definition of a Demand Deposit Account is one in which the funds ARE always available for withdrawal on demand, a check or draft is a DEMAND for withdrawal. If you want an extension of credit that's called an LC, or Letter of Credit. Different animal and withdrawal requests are not Demands, nor are they negiotable.

Also, technically the Commercial DDA account with OD protection can put a bank under its liquidity requirements because the large dollar amounts usually associated with Commercial Accounts.

This is the same Regulation and reason that Commercial DDAs are not allowed to receive interest on deposited balances.

***************

However, If you have enough money there are ways around this... I was in Commercial Banking and we had all sorts of crazy schemes for not charging OD fees to big corporate clients accounts.

In affect there was OD protection but technically they were sweep accounts or whatever accounts, blah blah blah....

Best wishes,

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Is there any way to fight these preditory NSF fees - like in the credit repair wars - or is the only answer to switch to a CU or reasonable bank?

I am particularly ticked off today as I just discovered last Fri my bank hit one of my accounts with a $34 OD charge AND NOTHING CLEARED FRI! This left that account NEG $31.21 - Do the math. They took $34 from me and I'm $31 in the red? This is not the first time this has happened.

I've debated this with the service reps with mixed results on getting credits but it's mental gynastics.

I really want to do something to fight this. Any suggestions? Or do I just move the accounts?

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Hi CtrlAltDelete,

I've debated this with the service reps with mixed results on getting credits but it's mental gynastics.

I really want to do something to fight this. Any suggestions? Or do I just move the accounts?

That depends. Is your acount a personal account or commercial.

There is very little you can do if you have a commercial account. Businesses run differently than you and I. Remember as a commercial enterprise you are not protected by the same regulations as an individual consumer.

It is very possible that the processing procedures or policies of your bank are designed to put you in a position of having lots of NSFs, if this is the case then maybe a new bank with better computers and processing may be in order.

I've debated this with the service reps with mixed results on getting credits but it's mental gynastics.

The fact the reps have worked with you at all means they are more reasonable than average bankers.

Is there any way to fight these preditory NSF fees - like in the credit repair wars - or is the only answer to switch to a CU or reasonable bank?

In a word - NO. (-But there is always a "Butt" Ooophs I mean "But" ...)

Switching Banks isn't going to help you too much either. All banks pretty much operate the same way.

BUT - I don't know the specifics of your situation. You have to evaluate the POLICIES and PROCEDURES of the bank. Are they designed for SLOW processing of your credits and fast processing of your debits? If so, find a better bank.

The real anser here is better MANAGEMENT. You are responsible for ensuring that no one can take advantage of you. Basically, if you have these problems at one bank, unless you you manage your checking account differently, you're going to have these same problems where ever you go. (That better management includes finding a better bank if you have objectively determined that the bank is designed to make you have NSFs.)

"Good Credit is Sexy" clearly states that you must get your finances in order so you can rebuild your credit and don't make the same mistakes again.

The same is (usually) true for your checking account. You must change how you use your checking account so they CAN'T Nail you for those darn NSF fees. (Unless of course you evaluate the bank and determine that they are designed to make you have NSF fees.)

***********************************************************

FYI:

I am particularly ticked off today as I just discovered last Fri my bank hit one of my accounts with a $34 OD charge AND NOTHING CLEARED FRI! This left that account NEG $31.21 - Do the math. They took $34 from me and I'm $31 in the red? This is not the first time this has happened.

It is not uncommon to have the NSF or Uncollected funds fee hit your account a day or two after the checks clear.

***********************************************************

Good luck,

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Thanks Radio - truth is there's a bit of both - some the nature of my business which has few but larger deposits and some the bank.

You quoted the part about a $34 OD charge creating a $31 neg balance - do you see my real anger there? How can the neg number be LESS than the OD charge IF I was OD'd before the charge allowing it to begin with.

If I understand your reply. I need do two things, find a better bank and control account more closely.

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I do understand your frustration, I've seen many people go through this.

It looks as though you had $3.00 in the account before they debited your account for the NSF charge.

You quoted the part about a $34 OD charge creating a $31 neg balance - do you see my real anger there? How can the neg number be LESS than the OD charge IF I was OD'd before the charge allowing it to begin with.

You have to treat this like a routine business management problem.

Find a way to watch the account EVERY day, (usually they have an online account feature.) You must know your outstanding debits and checks at any given time, do a quick "down and dirty" reconciliation everyday so you can adjust your debit card use or new check writing accordingly.

And also, get that blasted hold policy brochure from the branch, read it understand it, and figure out what you have to do to avoid getting nailed.

(I suspect the biggest fees you are paying are UNCOLLECTED Funds charges, not NSF charges. Which of course make you incurr more NSF charges later in the week because you got nailed for the $34.00 UCFs in the first place...)

This Hold Policy brochure is what you need to evaluate to determine if you need a new bank.

You can do it.

Good luck,

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BTW: If it makes you feel any better think about MY bank.

I have an Line of Credit OD protector. It so wonderful - no more $38.00 bounced check fees - right ! Well -not exactly...

Guess what ? Every time My LOC advances they charge me a $25.00 LOC advance fee. Oh yeah If I transfer the money in advance of the check posting I only get nailed for a $15.00 transfer fee.

Some Deal eh...

Needless to say, I watch my account like a hawk to avoid the LOC advance or transfer fee.

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Is there any way to fight these preditory NSF fees - like in the credit repair wars - or is the only answer to switch to a CU or reasonable bank?

In a free market environment, that is greatest weapon...

If there is good competition in your area, then there are plenty of other financial institutions who are hungry for your business.

Although fighting NSF fees is a losing battle...

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