Recently, my bank, Charter One, owned by Citizen's Bank, notified it's customers via the "memo" section of their statements to the following:
We are changing the way we process Signature based transactions (using the "credit option) from authorizing the payment and deducting it from your balance and restoring it the next day, until merchant requests payment several days later, to immediately withholding the amount of the transaction from your available balance until merchant claims the funds. Should the merchant not request the funds, within a reasonable time period, the funds will become available to you again, until the merchant requests payment.
This is a change in the way my account has been handled for the last 15 or so years that I can remember.
Now - while these "PENDING" authorizations are held from your account, they cannot be used to pay any/all requests for payment that process to your account. So if you have $1000 being held for potential, future obligations, if a check tries to post for $5.00, you are charged a $35 fee to cover the transaction that overdrew your account. That $1000 in holds may end up just being that, "holds".in addition to this shady practice, my account balance never shows a negative to my account, so I was unaware of this happening. Until I received the notice, several days later by mail, two additional days of fees were tacked on, totaling $473.
Not once, did my account show a negative. How am I to know this to prevent further fees being charged if I can not view this on my online account? Also - I cannot see "pending authorization merchants/outstanding debits on my account. How can they charge me fees when my account never dips below zero?
With pending authorizations being held from my account, I am unable to use this money. Many instances where I have purchased something with my debit/credit card, and then the item gets cancelled by me or by the merchant, yet Charter One will keep a hold on that money for a "reasonable amount of time, at their discretion, and THEY are able to do with my funds as they wish. (don't they get interest on money?)
Here is an example of how the pending authorization system is flawed: If I have $100 in my account and go to the gas station. I use my debit/credit card for purchase. The gas station gets authorization for an unknown (by me) amount, which varies from gas station to gas station. Some get authorization for $1, some for $50, while some for $80.
I know this since that is the max they allow me to pump using the outside machine. (I own a Suburban which can take up to $150 in gas.)
So let's say I only get $20 in gas and use my card at the pump, but the gas station authorizes $100 (to keep it simple)
I know I have $100 in my account, but only spend $20 at the gas station. Therefore, I think I have $80 left to make additional purchases. I hit the grocery store, McDonalds, etc. And spend all the $80 I think I have in my account. Whamo! I will incur fee after fee from the bank because they have held my money for the $100 authorization, which technically will only post or debit my account for $20. What am I to do in the meantime for cash?
On the flip side, a purchase I made at Saks.com which only gets authorization for $2.50 at order time, even though my purchase was for $413.00 - this is not an accurate authorization either. And when it posts to my account, $413.00 will be debited after the item has shipped. Are they going to go back on my account and see what the balance was on the $2.50 charge, that really was $413.00, charge me more fees?
How can the bank withhold MY MONEY from me until an item gets posted to my account? Pending authorizations are just that, PENDING, until it gets processed by the merchant for payment, and THEN gets deducted from my checking account.
My checking account is not a line of credit like a credit card. It is secured by my own money, and I am the one who has to make sure the funds are there when purchases are posted. What happens if Charter One gets an authorization in the wrong amount by the slip of a finger, potentially, and my money is withheld, unbeknownst to me, and I make purchases. Authorization should have been for $100 and it gets put through at $1000.
Many times, my pending authorizations result in nothing be debited from my account for one reason or another. And why do they get to determine what a reasonable amount of time is? It could be 2,5, 7 days? Just enough days to rack up a few fees here and there to their benefit.
How does the consumer know which places get which amount of authorizations to avoid being overdrawn on potential authorizations that may or may not occur?
My online account shows my account to be in the positive all throughout these 3 days of incurring fees. They need to show me a negative when it occurs (thru pending authorizations or debited items) so I can deposit money and not incur fee after fee after fee!
Also, their choosing of the order to pay items at their discretion is unacceptable. Items should post as they are received for such. The bank decides who to pay and not to pay while they line their pockets with outrageous fees incurred by its customers. What a scam that is. Wouldn't it be better to pay 5 merchants, instead of 1?
Last month I had over 5600.00 in deposits and 3400.00 in withdrawals. This month it's even more. I have not balaced my checkbook, since I can remember, so those who say, "balance your account", I say, IT WON'T HAPPEN! I don't have the time, energy or desire to do this. My system has worked for me the last 15-20 years and it won't change now. But I will probably use a credit card in the same fashion to avoid more fees. When a credit card company authorizes a transaction, if you are over your limit, unless you reach your ending date and you go over your limit with POSTED transactions, you don't get hit with a late fee.
I am on a mission to expose these shady practices and will continue to do so until I receive all of my fees back.
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