Erik Weech learned about sneaky banking polices the hard way. A few weeks ago, Bank of America hit the Chicago marketing man with a $35 overdraft fee when he had more than $130 in his account. The bank was apparently “holding” his money for charges that hadn’t cleared — only they appear to have been holding three times more than he actually spent. Then, if that wasn’t enough, they “reordered” his subsequent purchases in a way that tripled his overdraft charges. Within a couple days, he had racked up $140 in fees.
Authorization holds and transaction reordering are among the banking practices taking increasing heat recently from both consumers and lawmakers. Although nickel-and-dime fees are pervasive — just check your cable bill — the big financial institutions have become poster children for customer abuse. With direct access to your cash, they have developed a range of sneaky tricks that can quickly whittle down your account.
Use your credit card and you’re likely to find that they’ve hiked your interest rate, perhaps switching it from a fixed-rate to a variable. Don’t use your card and you could get hit with an inactivity fee. Fail to fix an overdraft promptly and you could get hit with a zero balance fee — in addition to overdraft charges. Flee the bank and they’re likely to slap you with an exit fee.
“Consumers would be shocked at how many different tricks the regulators allow banks to use to take money out of their wallets,” said Ed Mierzwinski, consumer services projects director at the U.S. Public Interest Research Group in Washington. “As long as the banks disclose in the small print that they are going to rob you, it’s legal to rob you.”
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