Banks can Reorder some of Your Transactions
Did you know your bank is allowed to re-sequence the order of your balance transfers,deposits and dates your checks are processed? If you do not see the costly consequences of this unfair freedom enjoyed by your online bank, then consider the following sequence of transactions.
You have an account balance of two hundred dollars with 15 days left before your rent is due. Your rent is $350, so you deposit another $200 to cover your rent with another $50 left over. You pay your landlord the rent with a check, then the next day write a check for your $75 gas bill knowing the check will clear quite a bit later with gas company avoiding a $25 overdraft.
Right? WRONG the bank currently legally has the right to reorder the two transactions even though chronologically you should have avoided any penalties or overdraft fees! This means they can can unfairly clear the $75 check first which happened last in time! THEN the check to your landlord will bounce which could lead to your eviction based on arbitrary actions of your friendly banker.
Understand that your bank is allowed to do this, but I know Charles Schwab online bank does not engage in this surreptitious practice.
Susan Weinstock puts it best when states that "Banks are still allowed to reorder the processing of checks and electronic transfers, putting through the highest bill first. Why? “It maximizes overdraft fees,” says , director of safe checking research at The Pew Charitable Trusts."
You have an account balance of two hundred dollars with 15 days left before your rent is due. Your rent is $350, so you deposit another $200 to cover your rent with another $50 left over. You pay your landlord the rent with a check, then the next day write a check for your $75 gas bill knowing the check will clear quite a bit later with gas company avoiding a $25 overdraft.
Right? WRONG the bank currently legally has the right to reorder the two transactions even though chronologically you should have avoided any penalties or overdraft fees! This means they can can unfairly clear the $75 check first which happened last in time! THEN the check to your landlord will bounce which could lead to your eviction based on arbitrary actions of your friendly banker.
Understand that your bank is allowed to do this, but I know Charles Schwab online bank does not engage in this surreptitious practice.
Susan Weinstock puts it best when states that "Banks are still allowed to reorder the processing of checks and electronic transfers, putting through the highest bill first. Why? “It maximizes overdraft fees,” says , director of safe checking research at The Pew Charitable Trusts."
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