As a former five-year employee of Compass Bank I can tell you that the new posting system they are now using is designed to charge more NSF fees to customers and therefore make more income for the bank. You will be told it is their way of moving closer to an "online system", but that is simply not true. Almost every other bank out there today has an online system and has for many years. Converting to an online system has nothing to do with their current policies.
They have a new system called "EDP" or Effective Date Posting. What this means is that items are run either as EDP or current day depending on what time they are presented to the bank. It used to be that all credits posted before debits, but under the current system that is no longer true.
For example, if you come to the bank at 8:30 in the morning and write a check for cash it is considered EDP because it happened before the bank opened for business that day. If you came later in the afternoon to make a deposit, but before the cut-off time, it would be considered current day and would post that night at midnight after the cashed check.
Where the real problem comes from is direct deposits. The money from a direct deposit comes into your account sometime after 12:01 A.M. On the day you get paid. It is immediately put into your "available" balance, meaning you are able to use that money. Here is the catch now: even though that money has been collected from the other bank and put in your available balance and you have access to it, and the deposit occurs before the bank opens for business, it is considered a current day item, meaning it will post last to your account. If another item comes to the bank that day and is presented against your posted balance it would be considered EDP and if you didn't have enough in your collected balance, then you will be charged a fee even though you have the money available to you. (Checks didn't clear in the morning before, only at midnight of the same business day, but under the new Check 21 law that was passed by the government, checks are clearing electronically now at a much faster rate and both at night and in the morning).
The reason I am reporting this is because I became a victim of this myself last week. Mind you I worked for this company for five years and have a total of twelve years of banking experience and have never bounced a check. There is not one page of documentation where they can show me that my account ever went into the negative, yet I was assessed five NSF fees. The employees of the bank couldn't even explain it to me-even they don't know how their system works.
I am fortunate as I still have friends who work there and I was able to get a refund of some of the fees, but I know for most of you that is not the case, especially since the bank issued a mandate at the beginning of the year that no one was to receive a refund of more than $70. If a former employee of the bank and a twelve year banking veteran cannot figure out this system, how is the average consumer going to understand it?
I cannot see how the practice of making money available -money that the bank has collected from another bank-to a customer, but then charging them NSF fees if they use it before it officially "posts" to their account is legal. It certainly isn't ethical. What is the point of direct deposit then? It used to be so you had immediate access to your money and didn't have to go to the bank. Now you can still use it immediately, but you may be punished for it.
It might be better to go back to the good old days of taking your check to bank and cashing it. You may have to pay a small fee, but it's a heck of a lot cheaper than NSF fees. I hope someone does the research to find out if this practice is legal; I cannot fathom how it could be. And I hope someone files a lawsuit against them.
As a side note: People always asked me how we were able to offer free checking and pay for ATM fees. Because of the revenue generated from NSF fees, that's how. Most people who want free accounts live paycheck to paycheck (as most of us do) and they count on you bouncing things. They hope you bounce things. You would pass out if you knew just how much income each branch takes in every month in fee income.
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