When Switching Banks, Be Wary of Lagging Transactions!

In the wake of the "reforms" being made to the US banking system, the banks have been scrambling for the many loopholes still in the system to maximize their revenues.

In spite of what had been touted as a long-term economic recession, how very curious indeed that we hear news reports of record-level profits being made by the banking industry, whilst the commoners - the banks' customers - founder onward in relative poverty.

For all the regulations that have supposedly been set up to stem the shamelessly greedy banking practices we have witnessed in recent years, among the major loopholes not covered by new regulations are the fees that banks are now - or soon will be - collecting from their customers.

Among the fees to plague some consumers are overdraft charges derived seemingly from a shamelessly conceived scam - and nonetheless legal.

How They Do It

Disgusted with his treatment at his current bank, a friend of mine recently opened new consumer accounts with another bank. Quite prudently he kept his current accounts with his current bank, so as to the let any pending transactions settle out. Afterwards, his plan was to close out the accounts with the old bank.

However, something is making him think twice about the whole idea to opening these new accounts.

In the few weeks that his new accounts have been open, my friend has noticed something funny about the numerous transactions within his everyday purchasing and "life expense" account: they haven't been updated in a timely manner against the actual balance in the account.

With his old bank, he is used to having his running (operating) balance adjusted almost instantly. His online balance is adjusted in real time against every purchase he makes, and thus he able to know up to the very moment what his "real" balance is.

This kind of service is especially attractive to those folks who live on a tight budget, and who "ride the zero-balance edge".

Danger

Provide a "real-time balance". His new bank doesn't do this.

While the new bank does register that a transaction has been made against his account, they update his actual account balance only once every few days. Meanwhile they list his previously updated balance as available operating funds against which he can make still purchases.

Overdraft Fees

What this means is that if his previously updated online balance shows as $100 and he has made more than $100 in purchases over the last several days since the update, his account will still show an available operating balance of $100.

But the trick is this: after a few days when the next update comes, his account will be suddenly overdrawn.

The result? Overdraft fees. Expensive overdraft fees!

A New Norm in Bank Revenue Generation?

While a few people may still adhere to the proven practice of keeping a written ledger balance, the whole idea behind using powerful computers and similar technology was to free us from these time-intensive accounting methods. Year after year, the banks used this as a key selling point to their advertisements.

So, what happened?

Thankfully, certain banks actually do use real-time account balancing, and use it as a selling point to rope in more customers.

Meanwhile certain banks - such as the new one my friend went to - seem to be the luddite on this technology, and further seem to be using nefarious methods as a way to impose expensive overdraft fees - fees easily of US$30 or more - per transaction.

So, assuming my friend had not kept close tabs on his actual balance, he could be seeing overdraft fees imposed by the bank, perhaps in excess of what he sees as his account's current balance.

Guess what? Upon seeing this nightmare in the making, my friend is closing his new accounts.

What of the Consumer?

While no doubt the balance in the account is the ultimate responsibility of the consumer, for those customers less prone to minding their math, this seems a scheme certain banks have drummed up to rake in more revenues. All in keeping with the new regulations that are supposed to keep their greedy ways in check. And so...

What of the consumer who already pays the bank for a mortgage, a car loan, and a "monthly user fee" for the privilege of keeping accounts with the bank.

Enough is enough!

When switching banks, be wary those lagging transactions! Proceed with caution!

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ABOUT THE AUTHOR: John Melendez is a freelance writer reporting on technology and consumer issues. John Melendez is a writer for hire. To email him, go to http://www.emailmeform.com/fid.php?formid=19595

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