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Any one familiar with banks and banking systems?
I'm talking about how a bank will use a system of taking care of your account in such an order, that it actually promotes overdrafts?
I thought it was called the "high to low" system, where instead of your checks and deposits are credited and deducted by the time stamp that they arrive at the bank, they first deduct all checks, starting with the highest amount first and on down to the lowest amount, making it more likely for your smaller amount checks to cause overdrafts on your account , THEN they will credit deposits....by doing things in this order, they can significantly increase their revenue from overdraft charges...
I've been trying to google this, so I could send the info to my parents, but not having any luck finding search results with the only term I know for this, "the high to low system"
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| August 16, 2006, 11:51 |
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Re: Any one familiar with banks and banking systems?
I have no idea how they work but that makes perfect sense to me!! The fuckers!!! 
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| August 16, 2006, 14:03 |
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Re: Any one familiar with banks and banking systems?
Very good question - I have been wondering about that myself!
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| August 16, 2006, 14:11 |
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Re: Any one familiar with banks and banking systems?
I didn't get anywhere googling for the "high to low system" but I did turn up some pages I bookmarked for later when I have time to read...using keyword search for "bank scams" in google groups,,,
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| August 16, 2006, 14:44 |
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funlovingpair
59 / couple
Frozen Tundra, Minnesota, US
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Re: Any one familiar with banks and banking systems?
A account that I had many years, that bank always did the checks first, but in what ever order they went threw the machine, and at the end of the day, they would credit the deposits made before 3 pm. The account that we have now, my check is direct deposit, so those funds are available that morning when the bank opens for business. They always credit the direct deposits first thing in the morning, then debits, last they do the rest credits for that day. Now my bank always prints everything out, by check number. POS debits, P-point O-of S-sale, come out as they are received.
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| August 16, 2006, 23:29 |
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Re: Any one familiar with banks and banking systems?
We have direct deposit for the husband's paycheck, but it's "pending" for two days every week, and doesn't show as available balance during that time...isn't that a real pisser? Not sure if it's due to the practice of the bank, or the employer's accounting department.
I really want to know exactly what one should ask a bank about what system they do use?
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| August 17, 2006, 04:12 |
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Re: Any one familiar with banks and banking systems?
If you have a GOOD bank, the credits and checks are prosessed in the order the show up.
For example. If I use the debit card on three things in one day and also write checks out that same day.
The debits show within a half hour. The checks in the order they are recieved by the place it is sent to. 
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| August 17, 2006, 09:03 |
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Re: Any one familiar with banks and banking systems?
Ah ha! Starting to get some search results on google/groups/
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The order in which your bank "clears" checks can make a big difference in the number and total amount of overdraft fees that it "takes" from its customers' accounts each day. If your bank uses the "biggest
first" (largest to smallest) processing method it can be quite costly to its customers (and quite profitable to the bank).
Here's an example: Let's say your bank charges a $30 overdraft fee. You have $1,000 in your checking account and four checks, Nos. 101 to 104, in the amounts of $60, $10, $30, and $950 are presented for
processing (in that order). If the checks are processed either by check number order, by the order in which they were presented or in ascending order (smallest to largest), the first three checks will clear and only the fourth check will "overdraft" the account. The bank
will charge one overdraft fee of $30. If the checks are presented in "biggest first" (largest to smallest) order, however, the $950 check will clear and all of the other smaller checks for $60, $30 and $10
will overdraft. The bank will charge three overdraft fees totaling $90.
Is this practice of "looting" customers' accounts legal? Apparently yes (at least in Florida). Is it fair? Is it right? You decide. While federal law allows banks to process checks in any order they choose many states have been busy enacting laws to stop banks from using the (predatory) "biggest first" check cashing practice.
California has identified the "biggest first" check cashing policy as an example of "bad faith" on the part of banks. Nevada law clearly prohibits banks from using "big-to-small" processing to boost bounced
check fees. It stipulates that when multiple checks are drawn on a single business day and there is not enough money in the account to pay all the checks, the checks must be cleared on the order of ascending amounts (smallest to biggest).
If you bank is using the (predatory) "biggest to smallest" check cashing policy and you ask they why you'll like get a well rehearsed answer about how the banks feels that their customers' largest checks are usually their most important checks so the bank tries to clear
those first. That explanation is pure balderdash!
"This has been something of a deep, dark secret," says Jean Ann Fox, director of consumer protection for the Consumer Federation of America.
"The only reason I'm aware of for banks to choose biggest first processing is to bring in more revenue."
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| August 17, 2006, 09:37 |
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funlovingpair
59 / couple
Frozen Tundra, Minnesota, US
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Re: Any one familiar with banks and banking systems?
Doesn't that just piss ya off. No wonder I never have enough room in my pockets for my own hands. There's always 15 more places/people that are just leeching us dry.
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| August 17, 2006, 12:20 |
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Re: Re: Any one familiar with banks and banking systems?
QUOTE (funlovingpair @ August 17, 2006, 12:20)
My bank doesn't do this, but I have a brother that is getting so ripped off! Banks don't disclose or want to disclose that they use this system.
From what I've read, the main purpose for offering and pushing overdraft protection is to milk what they can from people trying to live paycheck to paycheck.
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| August 18, 2006, 04:09 |
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Re: Any one familiar with banks and banking systems?
All Banks are rip off artists, they make their money from the ignorance of their customers and clients, mostly barrowers,mortgagies, and anthing to do with late charges and fees, usually the first fee they hit is where you have to maintain a minimum amount through out the whole month in your checking or savings, otherwise if you go below every month that could cost you at least 100.00 dollars a year in fees just on your checking account even if you do not have any overdrafts. Some people choose to pin there savings to their checking, so that will minimize the check overdrafts, but in the long run if you poorly manage your spendings ratio to savings, you will soon deplete your savings or go below the monthly minimum and the bank will then add a fee/charge to your savings account also. The Banks are at liberty to post what ever return/cashed/cancelled check they want first and then blame it on the computor or the day you sent in your payment, saying you should have mailed in your payments 5 to 7 days in advance, I have noticed that if I make a large payment it is cashed ASAP usually the next day, but if you send the same payment in a day or two before the deadline date the the Banks/loan facillities hold the check, or even loose it, then you pay a late fee. One of the worst things that you can get involved in is letting the mortgage companies or loan facilities take your monthly payments straight out of your account, in some instances the money was deducted from peoples accounts but not accounted for on their monthly payments and all the paper work gets lost, it becomes a court battle, and as we speak according to law the mortgage compies are only responsible to refund half the money.And that is how most of the terms of agree ments are written in the fine print, I know some people that swear by that payment plan and I know others who have lost there asses over it. So read and be carefull what you agree to.
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| August 19, 2006, 01:48 |
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Waukeshastud
57 / male
Waukesha, Wisconsin, US
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Re: Any one familiar with banks and banking systems?
I guess that the only way you would get an overdraft on your account would be if you wrote checks that you did not have enough money in your account to cover in the first place. In other words, If you write checks before you have the funds in your account and the checks and deposits hit your account the same day, but not in the "correct" order too bad for you. Writing checks without having the funds in your account to cover them is called check kiting and it is illegal.
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| September 9, 2006, 17:39 |
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Re: Any one familiar with banks and banking systems?
Oh yeah, "kiting" or as it's called in my part of the country... "floating" checks is bad, very bad and very illegal.
It just seems that as our world got more instant and electronic, the percentage of floating checks dropped, so then banks started introducing and promoting all these "overdraft protection" plans.
Which still seems, to me at least, to be a method solely devised to increase revenue through overdraft charges by encouraging overdrafts.
But hey, banks are businesses and businesses are all about revenue and profit. Although I don't have a problem with my bank, I still do not like them "juggling" the order of my checks and deposits and would prefer that they simply take care of my business in the order it enters their system, this would match up with the way I handle my account keeping.
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| September 13, 2006, 04:24 |
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