Last week I was running my balance pretty close to the bone, it being christmas and all, spending money on loved ones all of that good stuff.
I was not surprised to find that I had incurred an overdraft fee while waiting for some checks to come in and clear. What I was astonished to find is that Bank of America has structured it's transaction processing in such a manner as to increase the number of overdraft fees it can charge customers. I am not saying that Bank of America has structured it's transaciton processing this way for the sole purpose of ripping off customers, but I haven't found a compelling argument to support any other claim.
How is this accomplished. Bank of America Processes all transactions from Highest amount to Lowest amount. That means that if you have 5 checks that clear on the same day they post the largest amount first, the second largest amount second and so forth. Can you see how this increases the fees charged to customers for "Overdraft Protection"?? If not here's an example using some numbers.
Scenario 1: Customer X has 500 dollars in their checking account. On the 5th day of February 5 checks post in the amounts of $425, $80, $50, $35, $20. Using the BofA approach the $425 is processed first leaving the customer with a balance of $75, the other four are then processed resulting in 4 Overdraft fees.
Scenario 2: Customer X has 500 dollars in their checking account. On the 5th day of February 5 checks post in the amount of $425, $80, $50, $35, $20. Using what I consider a more reasonable approach the $20 is processed first leaving a balance of $480, then the $35 resulting in $445, then the $50, resulting in $395, then the $80 resulting in $315 then the $425 resulting in one overdraft.
I am not arguing that an overdraft has occured. I would fully expect the account holder to pay a $30 overdraft fee. What I do object to is that the order of the processing, which seems capricious at best is resulting in much higher fees being assessed.
When I explained this to the BofA customer service rep he was combative and obtuse. He kept bringing up the point that BofA has the right to process their transactions however they choose. I was not debating this point with him, I simply stated that if they process their transactions in such a manner that cause excess fees to be charged to their customers that they should be willing to waive some of those fees. It's unfair for BofA to assume that customers will know when checks will be processed by the bank. Balancing a checkbook is one thing. Timing when the bank is going to recognize cash flows is quite another.
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