How do banks work? - Page 2 - Tilted Forum Project Discussion Community

Xerxys · 05-27-2009, 12:03 PM

HA! Yes MSD, I wonder what everyone who said that time stamps are irrelevant think now??? They'll use them when it suits them to do so. But will not use them when they're trying to get the max-payout from you.

Quote:

Originally Posted by Lindy

She challenges anyone to show actual documentation of it being done the other way.

Haha, just saw this, (I know right

) ... seeing as I don't have documentation, how about proof of it happening the way many people have described as I detailed it in the OP?

Deltona Couple · 06-03-2009, 12:34 PM

I might be able to shed some light here as my Best man at my wedding was married to a banker at XXXX bank. I had actually asked her once this exact same thing and this is the information that I received:

Current electronic funds are processed as they arrive at the bank for demand of payment, This does NOT mean that when you swipe your card at a store, that the funds are withdrawn immediately. When you swipe your card, the store computer asks your bank, "does acct 12345 have $2.35 available at this time?" You have $10 in the account "Physically" so the bank says "yes". The store then accepts "payment" and gives you your pizza. At the end of the processing day, the pizza store will "batch" their system. This means taking all charges processed, and sends it to the STORE'S bank. Then, based on THAT bank's policy, it will send out a request for payment to YOUR bank, where the money actually transfers "physical" locations....

Now when you do an ATM withdraw, things are different. Those are direct bank-to-bank transfers, and are processed immediately.

So lets use your time line to see what came about....

Primary Account has $10.00 in it at 8:00 AM after all purchases have posted.

1:32 PM - $1.16 Double cheese Burger
1:54 PM - $1.00 Soda at vending machine
2:47 PM - $2.35 Pizza
3:32 PM - $1:00 Another soda
4:08 PM - $7:00 Withdrawn from ATM machine.

The first transaction goes into the store batch to be processed at end-of-day $1.16
The second transaction goes into the store batch to be processed at end-of-day $1.00
The third transaction goes into the store batch to be processed at end-of-day $2.35
The fourth transaction goes into the store batch to be processed at end-of-day $1.00
The fifth transaction is immediately processed
end of day account balance : $3.00
beginning of day 2, batches are processed and directed to their banks, now this next part will be random, as each bank processes things at different times. Some banks process at midnight, others wait until 9 am, and even others process batches at noon.

balance $3.00

2nd trans $1.00 reaches your account:

balance $2.00

4th trans $1.00 reaches your account:

balance $1.00

3rd trans $2.35 reaches your account:

balance -$1.35

overdraft fee applied of $35.00

balance -$36.35

1st trans $1.16 reaches your account:

balance -$37.51

overdraft fee applied of $35.00

balance -$72.51

Now can you see how you can get a double penalty? While I agree that it sucks, it is NOT up to your bank to make sure that money requests are immediately paid, and that they follow a time stamp. For instance if you wanted to buy say concert tickets, and you put them on reservation, the ticket selling entity will query your account to see if the funds are available at time of reservation, but they do not charge your account until you actually PURCHASE said tickets. Otherwise if you were shopping around for a few things, your account funds could be frozen by just checking a few things while you shop around. THAT is why your bank does not actually transfer the funds until another BANK institute requests them, and THAT is how the bank card companies(i.e. Visa and MC bank cards) can protect you from fraud.

I hope this helps explain things better.

Xerxys · 03-13-2010, 11:46 AM

Oh Joy

Quote:

Bank of America to End Debit Overdraft Fees
By ANDREW MARTIN
Published: March 9, 2010

In a move that could bring an end to the $40 cup of coffee, Bank of America said on Tuesday that it was doing away with overdraft fees on purchases made with debit cards, a decision that could cost the bank tens of millions a year in revenue and put pressure on other banks to do the same.

A federal rule will soon require banks to get permission to provide certain overdraft services.

Bank officials said that effective this summer, customers who try to make purchases with their debit cards without enough money in their checking accounts will simply be declined. Debit purchases account for roughly 60 percent of overdrafts at Bank of America, the nation’s largest issuer of debit cards.

Banks are bracing for a new federal rule that will require them to get permission from account holders before providing overdraft services for debit purchases and A.T.M. withdrawals. That change was already expected to wipe out billions of dollars in overdraft revenue for the banks.

“What our customers kept telling me is ‘just don’t let me spend money that I don’t have,’ ” said Susan Faulkner, the bank’s deposit and card product executive, who said the overdraft changes were part of a broader push to build trust among its customers. “We wanted to help them avoid those unexpected overdraft fees.”

The bank will continue to provide overdraft protection, for a fee, for checks and automatic payments, say to a biller that debits money from an account each month. Consumers who try to exceed their balance when making an A.T.M. withdrawal are already being notified that they will be charged a $35 overdraft fee if they choose to proceed.

There has been considerable consumer and political outcry against overdraft fees on deposit accounts. Over the last decade, the fees have become a major source of revenue for banks as they realized they could make more money by covering consumer overdrafts, offering a short-term loan for a fee, than in denying them.

Last year alone, banks generated about $20 billion from overdraft fees on debit purchases and A.T.M. transactions, and $12 billion more by covering checks and recurring bills, according to Moebs Services, an economic research firm.

But as reports surfaced of customers incurring hundreds, even thousands, in overdraft fees, often for purchases of just a few dollars like a cup of coffee, regulators and lawmakers stepped in. As of July 1, the Federal Reserve will require that banks obtain a customer’s consent before they can charge them overdraft fees for A.T.M. transactions and debit purchases; many banks now automatically enroll customers.

In anticipation of the new Fed rule, some banks have begun marketing campaigns to encourage their customers to opt in to overdraft protection to keep the dollars flowing.

Several bills have been introduced in Congress that would go beyond the Fed’s rules on overdraft fees.

Bank of America, by deciding to scrap overdraft charges on debit card purchases instead, is hoping to bolster its reputation with consumers at a time when anger at banks for their role in the financial crisis remains high.

The bank’s overdraft policy will take effect on June 19 for new customers and in early August for existing ones. Overdraft protection will still be available, typically for a fee of $10, to customers who link their checking accounts to savings accounts or credit cards.

Bank officials declined to say how much money the bank earned from overdraft fees, but anecdotal evidence suggests it had been a multibillion-dollar business for the bank.

“Consumers have shown a willingness to incur overdrafts if it’s covering mortgage payments or car payments, but not to cover a hot dog and a soda,” said Greg McBride, senior financial analyst at Bankrate.com and one of a handful of analysts and consumer advocates briefed by Bank of America on its new policy. “They don’t want to incur overdrafts on everyday purchases.”

Martin Eakes, chief executive for the Center for Responsible Lending, called Bank of America’s decision “a very big deal.”

“If Bank of America can forgo the fee income and do the right thing by their customers, this should be seen as a direct challenge to the other big banks to match and do the same,” said Mr. Eakes, who serves on a Bank of America advisory council, an unpaid position.

Of course, because of the new federal rule that requires customers to opt in to overdraft protection, all the big banks are anticipating a sharp drop in revenue once it goes into effect this summer.

But Mr. Eakes said that because of Bank of America’s size, it might have still charged hundreds of millions of dollars in overdraft fees even if most of its 37 million debit customers in the United States dropped out of overdraft protection.

Most major banks continue to charge overdraft fees on debit purchases, though some have modified their policies to appease critics. Some banks do not allow overdrafts for debit purchases or A.T.M. withdrawals.

It was not known on Tuesday how other banks would react to the change in Bank of America’s overdraft policy.

Told of the change late Tuesday, a spokesman for JPMorgan Chase declined to comment. A spokeswoman for Wells Fargo said the bank was still working on its overdraft plan as it relates to the new federal rules and was not yet prepared to release the details.

Banks are rethinking their policies on consumer products like credit cards, mortgages and debit cards to comply with new laws and regulations and the continued economic malaise. In the past, a relatively small number of customers generated such enormous fees from overdraft charges and penalties on credit cards that they subsidized free checking and generous rewards programs for the majority of customers.

In the case of overdraft, 93 percent of the fees are generated by just 14 percent of the customers who exceed their balances five times or more a year, according to a 2008 study by the Federal Deposit Insurance Corporation. Three-quarters of customers are not charged overdraft fees at all, the study found.

But the collapse in consumer credit, combined with new rules limiting banks’ ability to make money on credit cards and overdraft fees, has prompted banks to experiment with fees that reach a broader set of customers, like annual fees on credit cards and monthly fees on checking accounts.

This article has been revised to reflect the following correction:

Correction: March 13, 2010

Because of an editing error, an article on Wednesday about Bank of America’s decision to stop charging overdraft fees on debit purchases misstated Citibank’s overdraft policies, and a correction in this space on Friday contained a misspelling that affected its clarity. Citibank has never charged overdraft fees on one-time debit — not debt — purchases or A.T.M. transactions; it did not recently modify its policy to appease critics.

This article has been revised to reflect the following correction:

Correction: March 12, 2010

Because of an editing error, an article on Wednesday about Bank of America’s decision to stop charging overdraft fees on debit purchases misstated Citibank’s overdraft policies. Citibank has never charged overdraft fees on one-time debt purchases or A.T.M. transactions; it did not recently modify its policy to appease critics.

>>LINK<<

Well, this would be a good move. Frankly, I like that BoA has many amenities and branches. It makes traveling far more comfortable (and I've been doing a lot of that lately). It doesn't mean I would trust them though, it just means I can start using them again. I do, however, fear for my credit and will be watching this very closely.

06-03-2009, 12:34 PM	#42 (permalink)
Deltona Couple Addict Location: Spring, Texas	I might be able to shed some light here as my Best man at my wedding was married to a banker at XXXX bank. I had actually asked her once this exact same thing and this is the information that I received: Current electronic funds are processed as they arrive at the bank for demand of payment, This does NOT mean that when you swipe your card at a store, that the funds are withdrawn immediately. When you swipe your card, the store computer asks your bank, "does acct 12345 have $2.35 available at this time?" You have $10 in the account "Physically" so the bank says "yes". The store then accepts "payment" and gives you your pizza. At the end of the processing day, the pizza store will "batch" their system. This means taking all charges processed, and sends it to the STORE'S bank. Then, based on THAT bank's policy, it will send out a request for payment to YOUR bank, where the money actually transfers "physical" locations.... Now when you do an ATM withdraw, things are different. Those are direct bank-to-bank transfers, and are processed immediately. So lets use your time line to see what came about.... Primary Account has $10.00 in it at 8:00 AM after all purchases have posted. 1:32 PM - $1.16 Double cheese Burger 1:54 PM - $1.00 Soda at vending machine 2:47 PM - $2.35 Pizza 3:32 PM - $1:00 Another soda 4:08 PM - $7:00 Withdrawn from ATM machine. The first transaction goes into the store batch to be processed at end-of-day $1.16 The second transaction goes into the store batch to be processed at end-of-day $1.00 The third transaction goes into the store batch to be processed at end-of-day $2.35 The fourth transaction goes into the store batch to be processed at end-of-day $1.00 The fifth transaction is immediately processed end of day account balance : $3.00 beginning of day 2, batches are processed and directed to their banks, now this next part will be random, as each bank processes things at different times. Some banks process at midnight, others wait until 9 am, and even others process batches at noon. balance $3.00 2nd trans $1.00 reaches your account: balance $2.00 4th trans $1.00 reaches your account: balance $1.00 3rd trans $2.35 reaches your account: balance -$1.35 overdraft fee applied of $35.00 balance -$36.35 1st trans $1.16 reaches your account: balance -$37.51 overdraft fee applied of $35.00 balance -$72.51 Now can you see how you can get a double penalty? While I agree that it sucks, it is NOT up to your bank to make sure that money requests are immediately paid, and that they follow a time stamp. For instance if you wanted to buy say concert tickets, and you put them on reservation, the ticket selling entity will query your account to see if the funds are available at time of reservation, but they do not charge your account until you actually PURCHASE said tickets. Otherwise if you were shopping around for a few things, your account funds could be frozen by just checking a few things while you shop around. THAT is why your bank does not actually transfer the funds until another BANK institute requests them, and THAT is how the bank card companies(i.e. Visa and MC bank cards) can protect you from fraud. I hope this helps explain things better. __________________ "It is not that I have failed, but that I have found 10,000 ways that it DOESN'T work!" --Thomas Edison