An arm of the Pew Charitable Trusts have been gaining some traction with its campaign to get banks to disclose fees associated with checking accounts in clear, simple language. One bank practice that Pew thinks is especially important for banks to clearly explain is the order in which they process transactions, which can affect the number of fees you pay if you overdraw your account.
To help illustrate the problem, Pew’s Safe Checking in the Electronic Age project has created an interactive feature, dubbed “Transaction Infraction.” The tool lets you toggle between two screens that show you how the way in which a bank orders your transactions can greatly increase the fees you will pay. (The example is taken from an actual court case, Gutierrez vs. Wells Fargo Bank).
On the first screen, you can see what happens when the 12 transactions were processed chronologically. Mr. Gutierrez ends up with a negative balance of about $45, and a single $22 fee.
On the second screen, you can see the order in which Wells Fargo actually processed the same transactions. The result is a negative balance of nearly $112, and four fees, totaling $88.
Banks have typically processed transactions in the order of the largest to the smallest, which can increase overdraft fees. But some banks are now switching to processing the smallest , or at least chronological order.
(Wells Fargo made changes last May to the way it processes some payments. Paper checks and automatic deductions — like pre-authorized monthly student loan payments — are still paid from high to low. But the bank processes A.T.M. withdrawals, debit card purchases and online bills chronologically, in the order received.)
Take a look at the tool and let us know what you think in the comments section.
Bucks: Pew Feature Illustrates Banks’ Transaction Infractions
An arm of the Pew Charitable Trusts have been gaining some traction with its campaign to get banks to disclose fees associated with checking accounts in clear, simple language. One bank practice that Pew thinks is especially important for banks to clearly explain is the order in which they process transactions, which can affect the number of fees you pay if you overdraw your account.
To help illustrate the problem, Pew’s Safe Checking in the Electronic Age project has created an interactive feature, dubbed “Transaction Infraction.” The tool lets you toggle between two screens that show you how the way in which a bank orders your transactions can greatly increase the fees you will pay. (The example is taken from an actual court case, Gutierrez vs. Wells Fargo Bank).
On the first screen, you can see what happens when the 12 transactions were processed chronologically. Mr. Gutierrez ends up with a negative balance of about $45, and a single $22 fee.
On the second screen, you can see the order in which Wells Fargo actually processed the same transactions. The result is a negative balance of nearly $112, and four fees, totaling $88.
Banks have typically processed transactions in the order of the largest to the smallest, which can increase overdraft fees. But some banks are now switching to processing the smallest , or at least chronological order.
(Wells Fargo made changes last May to the way it processes some payments. Paper checks and automatic deductions — like pre-authorized monthly student loan payments — are still paid from high to low. But the bank processes A.T.M. withdrawals, debit card purchases and online bills chronologically, in the order received.)
Take a look at the tool and let us know what you think in the comments section.
Article source: http://feeds.nytimes.com/click.phdo?i=ebdea140ad1b5e0e97942a5162ac6b7e