Monday, September 08, 2008

When your debit card becomes a credit card

Wachovia has been caught with their hands in the pocketbooks of their checking account customers, this time playing fast and loose with when and in what order items are applied to accounts.

In the suit, filed in Florida seeking class-action status, the complaint demonstrates something most people have seen – when you have overdraft protection the bank will process the larger item(s) first in order to multiply the number of “service” or “convenience” fees.

For example, let’s say you pop the debit card into the machine one afternoon and it shows a balance of $205.00. You pull out $20.00. You then hit the gas station where you’re basically robbed at the pump of $65.00. You still have a balance today in your account of $120.00, right? At least you figure there will still be enough to cover than $95.00 automatic payment for your cable service.

Not really. What you don’t know is the bank is holding three of your smaller transactions (one for $19.50, one for $17.00 and another for 23.00) because the bank’s system knows you have that automatic bill-payment scheduled for $95.00 tomorrow. Rather than process and pay those three small ones and get one overdraft protection fee for the single $95.00 transaction, they will wait until the auto-pay one is done, leaving a balance of $25.00. Then come the three smaller ones which provide them with triple the “convenience fees” and all of a sudden you’re way in the hole. What it amounts to is usurious interest on the advanced funds they paid those three charges on.

Advice – don’t trust the balance you see at the ATM machine and don’t use an automated payment system!

And if you have a checking account at Wachovia and want to get in on the lawsuit, Google “Alters Boldt Brown Rash” the Florida law firm who filed the case.

The Honorable Judge Roy Bean

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