Three Things Your Bank Won’t Tell You

(Memphis) Believe it or not, the very places you trust with your money could be ripping you off!

The On Your Side Investigators are working to keep more of your money in your pocket by exposing bank secrets.

Imagine paying almost $900 in a single overdraft period.

It’s a worst case scenario, but an example of just how quickly those fees can multiply.

Outrageous and unfair is how many consumers describe bank policies and practices.

Mandi Freeman says she was shocked and upset to learn about something her bank was doing.

“So your bank was charging you because you weren’t using your debit card enough?” we asked.

“That’s correct,” replied Freeman.

The whole concept sort of seems like an oxymoron, charging you to access your own cash.

“Remember this is the consumer’s money, this is the family’s money,” says Mark Chalos of Lieff Cabraser.

Chalos’ Nashville law firm has successfully sued banks for egregious practices.

He told WREG, “The banks are making money off of your money!”

Which takes us to one of the first things banks don’t tell you: they often re-order transactions.

#1 – Re-ordering Transactions

“What we’ve found is that the banks are re-ordering the checks, taking the largest check and cashing that first, paying that first for the purpose of creating more bounced checks,” Chalos explains.

So forget everything you learned about balancing your checkbook in chronological order!

Many banks will deduct the biggest check first, no matter when you wrote it.

Combine this with treating debits and credits differently, placing holds on certain deposits, and that may add up to insufficient funds, which then leads to the second thing banks often don’t tell you!

#2 – Overdraft fees

“So not only do you have two bounced checks, you’ve got a pile of fees on top of it,” adds Chalos.

Federal regulations require banks to ask customers whether they want to opt in or out of overdraft protection, but research shows some customers still don’t understand it.

Furthermore, banks are cashing in when your money runs out.

According to the Consumer Financial Protection Bureau, non-sufficient funds and overdraft fees made up more than 60 percent of banks’ fee income in 2011.

Chalos said, “They end up costing families an awful lot of money and they make the banks very rich.”

There are overdraft fees, returned item fees, extended overdraft fees, even a fee to transfer money from a linked account for an overdraft.

Which leads us to the third thing banks don’t tell you about, hidden fees!

#3 – Hidden Fees

Freeman almost dumped her bank recently.

“I had a plan, you don’t swipe my card 10 times within a month, then I get charged $8,” she explains.

What’s worse, she called and couldn’t get straight answers.

Freeman said, “I had to call and just wait, listening maybe 20 or 30 minutes on hold. A lot of times they weren’t informed. I had to go to the actual bank website, then I went into the branch and the guy didn’t know about the fee.”

Chalos says, “A big part of the problem is that the banks do not disclose all of the fees.”

The On Your Side Investigators called dozens of area banks to ask about fees.

The good news is, several of the people we talked to could at least provide a basic explanation of a few fees.

Beyond that, we were directed to websites or told, we’d get more information after signing up, which makes it harder to shop around.

Freeman decided to stick with her bank.

“It took me several days and talking to several representatives before I could actually select the account type that suited my needs best without a fee.”

Chalos says, “If you feel like a bank is taking your money, you should make noise and hold them accountable.”

Experts say customers tend to get better service and fewer fees at local and regional banks, and especially credit unions.

Consumer advocates are pushing for better fee disclosure, like simple boxes that show all possible penalties.

6 comments

  • Fedup Memphian

    Does it REALLY matter what order the bank processes your items or checks if you are handling your money correctly? Don’t write checks or use your debit card if you don’t have the money in your account. It’s simple addition and subtraction. I get a bank statement EVERY month so I can balance my checkbook. Take responsibility people and stop blaming everyone else for your inability to do 4th grade math !!

  • Jazzy Me

    Yep, I keep a small amount of money in the brick & mortar bank. I use Online banking (Was ING, now Captial One which I never liked, but love the online banking.) I make interest on money in savings and checking. I earned more interest with less money in 2 months than I earned at the brick & mortar bank in a year. No fees for anything. Free ATM withdrawals throughout the city, smartphone check deposit. GREAT customer service reps. text alerts when accounts are low, easy OD protection. Had for 1 year and LOVING it!!!!

  • Single Mom in Memphis

    I had a problem last year with a local bank. I made several small transactions. Wendy’s for a burger and drink at $2.19, Dollar General for toothbrushes, toothpaste, and pencils, and $10 in gas. I got charged $36 for each transaction. A bill I had paid the previous week hadnt cleared yet, causing me to be at $0 bal in my checking. The transactions were allowed to go thru and did not alert my thru text that they were negative . I get a text everytime I swipe my debit card, pay online, or make a atm withdrawal. This particular bank’s text alerts you but doesnt reflect the true balance always if you recheck online. I was outraged, couldnt afford the fees, plus my regular bills. Those fees would’ve taken my entire weekly check. My hours had been cut at work due to it being slow. I called the bank, and they agreed it was unfair. They credited me back the fees. So when my check deposited a couple days later, I could pay my bills. I’ve had purchases declined before for small amounts and was surprised to learn these transactions all $10 or less were processed. I was told the daily limit changes daily on the amount the bank will pay. She said a transaction of say $30 could go thru one day and not the next. Another employee said to avoid those charges have to checking accts to avoid too many withdrawals or transfers from savins to checking. The only catch, you need a direct deposit for each checking account or recurring transaction that would transfer money into the 2nd account from the 1st one. I chose not to do that, I am currently unemployed and now incurring fees for not having direct deposit anymore. Waiting for unemployment to start. I’ve incurred this fee for Jan and Feb so far. Hoping the unemployment starts soon to avoid March’s fees. So I can avoid transferring the littlr amount of cash leftbin my savings to cover the now checking fee I have and avoid the fees of transferring to often from my savings. And I will definitely be shopping for a credit union. My tax refund will go towards bills when it cones next week, not bank fees.

  • greg

    This report is so one sided. Banks disclose all fees that are associated with the account at the time of opening. Large items are posted first to ensure the most important things are paid first. Mortgage Rent car notes. etc. If you spend more money than you have … and the bank covers it for you genius ….its a loan… duhhh.

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