Sneaky Games Banks Play to Suck You Dry
By Ryan Healy | November 16, 2007
Did you know banks are sometimes as evil as credit card companies?
Here’s a sneaky game that 8 out of the 10 largest banks confess to playing. They cash the largest checks first and the smallest checks last instead of the order in which they arrived.
Why would they do such a thing?
To try to force you into an overdraft position. If they can make you go overdraft with one or two large checks, then they can hit you with an overdraft fee on each small check that is cashed afterwards. Say you have five small outstanding checks. Boom. Five overdraft fees.
If thy cashed checks in reverse order of the size, or if they merely cashed them in the order they were received, you might pay only one or two overdraft fees.
The banks don’t want this. It means less profit for them!
According to the blog post Banks + Debt = Evil I read over on Fred Black’s blog, banks are now making $17.5 billion a year in overdraft fees. Did you catch that? Billions!
That’s a heck of a lot of money by any standard. And much of it is because of banks unfairly shifting time and money in their favor.
If you have a moment, I encourage you to read about a few of the other sneaky games banks play here.
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Topics: Debt, Tips & Advice |
3 Responses to “Sneaky Games Banks Play to Suck You Dry”
Comments
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November 16th, 2007 at 9:04 pm
Boy, Ryan really has my number. I’m now 3 for 3 on doing stupid things financially. I’m guilty of having this happen to me on multiple occasions, including the most recent of just two weeks ago.
One of my accounts was quite low and two things came through, a larger check and a $5 check. According to the bank rule, the larger would get cashed first, which completely wiped out the account, causing not just one bounced check fee (of $35) but a second as well. Imagine, a $35 bank fee on a $5 check that I had forgot that I wrote…
Very frustrating and very foolish of me to leave myself in that position. The lesson I learned and the action plan I set as a goal for myself to prevent this from happening again was to re-establish a savings account with some money off to the side with overdraft protection; just in case it were to happen again, I would be charged $5 instead of $35.
Anyway, I’m grateful that the $35 went to someone at my bank, maybe someone’s bonus for the holidays. And maybe that wealthy banker will donate it to some meaningful charity and I’ll be happy. =) another lesson learned the hard way. (sigh) -john
November 17th, 2007 at 8:57 am
Oh yeah, I’ve definitely noticed that. While I was in college I had a terrible habit of overdrafting, ugh. Everytime the largest amount would be taken off first, never failed. Wow, I almost forgot about those days. Its been years since my last overdraft. Wish I would have had the mindset then, that I have now. They would not get away with that now… I would have dated, timestamped receipts to backup my arguments. Back then I didn’t even think to call.
November 17th, 2007 at 7:12 pm
John - That’s a good plan to prevent overdraft fees. I have an overdraft account attached to my checking. If I go over limit, it simply pulls from the line of credit (LOC) without charging me any fees. Of course, if I don’t pay back the LOC immediately, it accrues interest.
Amanda - My sister is college age. She goes overdraft almost every month. Glad to hear you’ve changed.
And yes, never hurts to call the bank and use your records to get them to reverse an overdraft fee.