I’ve just been made aware of a new tactic being used by banks to generate fees. I thought Bank of America was the absolute worst for engineering mechanisms to maximize overdraft fees. It seems that WaMu (Washington Mutual) now holds this honor above BOA with a process that is simply evil at it’s core. They will display a deposit in the accounts “Available Balance” but will then charge overdraft fees on any transactions that occur before the deposit actually moves to a posted status. They have set this period between “pending” and “posted” at 24 hours.
So here’s how it works: You get a direct payroll deposit at midnight. WaMu will show this deposit in your “Available Balance” on-line and through any other available inquiry method. So you have the money to spend correct? Wrong. If you spend any money that exceeds the funds available prior to this deposit you will be charged an overdraft fee for each negative transaction. WaMu explains this through their process of posting all debits before deposits. But wait. WaMu displayed the funds as available? Doesn’t matter. The funds aren’t actually available to be used until the deposit moves into “posted” status 24 hours after they’ve displayed the funds as available.
Let’s face it. We’re getting way past the point where the bank is mostly a liability for consumers in todays economy. These fee tactics and irresponsible lending practices have undermined faith in the banking system for a large segment of Americans. In fact the number stands at about 36% according to the banking industry itself so we can consider that the most conservative estimate. It’s actually probably more like 50% and growing. The banks explain all of this through the repeated proclamation that they are a business intending to make money like any other. So run, don’t walk to your local credit union and make it known to the banks that if their business is taking our money for nothing then we don’t want their product.
Don’t get me started!! First of all, I completely understand your frustration with banks. They are sort of like insurance…a necessary evil. However, I’d like to shed some light on the “available balance” situation. First of all, direct deposits do not post at midnight…at least they don’t here. They come through at 4 a.m. Checks come through at midnight along with any deposits made prior to 2:00. Deposits post first. Furthermore, any check that you write in anticipation of your direct deposit is called “kiting”…using float time to manipulate your funds. Any check that should happen to come through prior to your direct actually posting to your account (as opposed to memo posting) would had to have been written prior to the deposit when the money wasn’t there. Yes, it is available…but not before it’s there!!! If you use a pocketcheck or write a paper check anytime after the memo post (let’s just say it’s 12:00 midnight), then that check or debit would clear…no problems. The problem arises when folks use the debit card or write a check the DAY BEFORE in anticipation of the deposit.
As for the credit unions, they simply do not play by the same rules that banks do. They are funded and backed by the government and not for profit. They have a select “membership” and are not accessible to everyone.
Please don’t put all banks in the same category. There are plenty of people out there who work hard every day trying to do what is right for the customer. Can I introduce you to RBC Bank USA??
My parents have been with RBC since Centura. To my knowledge they’ve never had a problem.
“Yes, it is available…but not before it’s there!!!”
I don’t get it. Under what circumstances is it possible for something to be available before it’s “there” (present and accounted for)?
Regardless of when a deposit posts a bank should not show any amount in the “available” balance that is not actually “available” when according to the banks own systems the deposit has not officially posted. There’s only one real plausible reason for this and it’s deception. It’s WaMu’s way of saying “It’s okay to use your money, there it is see…. Ooops, no it’s not. Thank you for the fee. Did you learn your lesson?” This stuff smells of desperation from a bank that is always listed in the top 10 to potentially fail any day now.
While I’ve had banks that did take 24 hours to post a deposit I have never worked with a bank, or credit union that showed the amount as available before they posted it. WaMu is the first bank I’ve ever heard of that does this. Also, in the case of direct deposits, every financial institution I’ve ever used made direct deposit funds available immediately at midnight and they have never processed that days debits before the deposit moving from “pending” but available to “posted”. I’ve heard both Wachovia and BB&T do process what are known as “payday debits” before “available” direct deposit funds just like WaMu.