Some transactions, like groceries that you pay for with your debit card, hit your account right away and are typically deducted from your available balance even before they are fully processed. According to the Center for Responsible Lending, confusion over available balance is now the top complaint consumers have when it comes to overdraft fees, followed by the timing (and sequence) in which debits and credits are processed. This transition has been rough on consumers. "We're going from a paper-based banking world that has existed for hundreds of years to a digital banking world that's still relatively in its infancy,” says Ranta, who adds that real-time processing is still a ways off. They also have to deal with a hodge podge of payments infrastructure, which dictates how, and at what speed, different transactions are processed. To be fair, it’s not just banks trying to maximize fees that creates the problem. If they processed the $100 checks first, you’d have only one overdraft fee, for the $900 check.) By processing the $900 first, they insure four of the five $100 checks will bounce. (Say you’ve got $1,000 in your account and have written one $900 check and five for $100. According to a 2015 study from the Pew Charitable Trusts, roughly half of banks still intentionally reorder transactions, meaning, they rearrange payments, processing them from largest to smallest, which maximizes the overdraft fees they can charge. This has everything to do with how banks process a tangle of transactions. “For people who count on timing things, it's getting harder and harder to play the game," says Jerry Silver, global banking research director at IDC Financial Insights, a financial research firm. "I figured it would all come out in the wash," she said. Rudder, a retired college financial aid officer who lives in rural Northern California, was low on cash and had been vigilant about checking her balance at least once per day to avoid overdraft fees. She knew she had written a check recently but didn't see it reflected online yet She also planned to make a deposit the next day. "Consumers need to understand that the balance you see is not necessarily your actual available balance because there are so many moving parts," says Mark Ranta, head of digital banking solutions at ACI Worldwide, which provides payments systems for financial institutions.Īs Rudder and others have learned the hard way, it’s a gamble to try and predict when things will hit your account.
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The not-so-small problem: what's shown might not be a great source for judging whether you’ll be hit with overdraft fees or even have transactions declined. The display creates an apparently false sense among customers that they know exactly what their available balances are-after all, that swipe of your debit card a few minutes ago may well show up online. It's never been so easy to check your bank account balance. Millennials do it all the time on their smartphones.