Nighthawk
Cincinnati,#2Consumer Suggestion
Wed, August 22, 2007
Many of the larger banks are enhancing overdraft fee income by using one or both of these techniques: 1) Debit Card and other electronic activity is "deducted" from the account balance the moment the bank knows about it, even if the item takes a few days to clear. The bank has authorized the transaction, so they are on the hook for the money. Anytime you draw on those funds, they're gonna ring the register. 2) The availability of deposited funds is reduced by "float" -- that is the bank won't credit you for the deposit until they get the money. If you're being paid electronically though, there is no float. In most cases for deposits of checks the bank collects from the other bank in 1-2 days, but that availability is not always passed to the customer. The best way to avoid this trap: 1) Use cash or checks and avoid debit cards. 2) Check the website -- pay attention to the available balance - not the ledger or account balance. A $1000 deposit may show as $1000 ledger but only $100-200 available. 3) Find a small local bank or credit union and move your account. They tend to be less sophisicated and work off ledger (actual) balances. I hope this helps.