Banking question

[LunaC]

Nothing earth-shattering but odd, nonetheless.......

If I write a check to pay a bill, my bank account is debited within 24 hrs. after the payee deposits my check. Yet when *I* deposit a check (from my brokerage house, for example - tons of money in their account) the bank denies me access to my funds by putting a "hold" on the check for seven days, supposedly so the check can clear.

Can anyone explain WHY there is such a discrepancy in handling/processing checks in these days of instantaneous electronic transfers? When I spoke with a lackey at the bank's customer service dept. I was told that the bank isn't set up for electronic transfers but this seemed ridiculous to me.

Is the bank putting a hold on my funds so they can make money off of the "float"? If so, would this be considered a predatory practice?

Just wondering........

[Stephanie]

1. It is so the bank can earn interest on your money

Any more questions?

[LSparkle]

2. Look at Chimperor's big contributors

MBNA, Citibank, et al. What's good for banks is good for the gud ole US of A.

[LunaC]

5. That's what I thought

So would this be considered a "predatory practice"?

[unblock]

8. not true

you earn interest starting the day you deposit the check (assuming you made that day's cutoff, typically 3pm). the hold prevents you from cashing it out, but the funds are earning interest on your behalf.

the hold is there to give a prudent amount of time to ensure that the check is good. in many cases, the check can be confirmed to be good in less time, but the hold times are often dictated by the worst case, e.g., what if the check is written from a bank that isn't as automated as the rest of them. it's easier to enforce a blanket 3-day hold for all in-state checks, e.g., than it is to release holds in a variable number of days.

in a few years, though, banking software will improve and things will generally clear faster.

[northzax]

3. under the new banking rules

a bank can send an electronic copy of the check to the owner's bank, making the check clear instantaneously. This is bad for those of us used to floating checks before pay day. My bank (a credit union) has never held funds (ok, once, when the check exceeded 5,000 they held the amount above 5K) but normally, I put a check into the atm and withdraw money the same minute. no problem. or I can go to CVS and my debit card shows the new balance immediately, even on weekends. And I'm not even using my own CU's atm! it's like magic.

[secedeeconomically]

4. For the same reason banks charge as much a $40 for an

International wire transfer, or $10 for a domestic wire transfer. Because they can, simple as that. They are thieves anyway you look at it.

[depakid]

13. That's the bottom line

They are theives and even when they are regulated, they can and will steal from you. That's why there are so many class action suits against them.

Unfortunately, Demoicrats have sold us all out over consumer protection laws for years- which is unfortunate, because this could be a big issue among the working class.

[Mystified]

6. My take on it

As another poster noted, due to a very recent change in regulations (late 2004) banks no longer have to have the actual check you wrote in hand to debit your account. An electronic copy/image of it will do. However, the clearing house for deposits still has a lag of a couple of days, meaning the bank sends its checks out a few times a week rather than every day, so they don't know if the check cleared until the institution on which it is drawn is presented with the check. Of course, they also make money on the float, but I think that is simply lagniappe for them.

[BeeBee]

9. The new law is called "Check 21"

Google it... They can take your money right away but don't have to give it in the same amount of time.

[newyawker99]

11. Hi Mystified!!

Welcome to DU!! :toast:

[Me.]

7. Them Earning Interest Is Right

they make money off you every which way. Now here's another one most people don't know about. If you put money in an account and leave it there to earn interest, saving for a rainy day or house or whatever, after five years the state is going to come along, see there is no activity on the account and take it. I found out about this when our credit union alerted us that we were reaching the 5 year mark. We had to sin affidavits to keep it. Then recently, a friend whose grandmother had put money in an account for her to have after her grandmother's passing, took the savings book to the bank only to find out the account had been wiped. The bank said her only recourse was to go on line and see if it was listed as unclaimed funds. Now this is New York State and I don't know if it applies everywhere. but no one knows about this tricky little practice and even if the amount is $10., the money is yours and the gov. shouldn't be able to grab it. But just goes to show how skeevy banking has become.

[Aristus]

10. I agree that banks are greedy, predatory organizations, ( I used

to work in the banking field) but simple common sense would dictate that it's much easier for your bank to verify funds on your check than it is for them to verify funds for a check drawn on some other bank. Right?

[SoCalDem]

12. Because they think you are a low-life who would forge a check,

deposit it, and withdraw the cash, and leave them holding a piece of worthless paper.:)

That's the short version..


The long version is that they allow their "primo" customers float time, but not their "ordianry" customers:)

[ClassicDem]

14. Get a better bank.

My bank I can deposit a check and have access to the funds immediately.

I bank with Washington Mutual by the way if you have one in your area I highly recommend them.