December 27, 2011, 12:25 pm
Pew Feature Illustrates Banks’ Transaction Infractions
By ANN CARRNS
An arm of the Pew Charitable Trusts have been gaining some traction with its campaign to get banks to disclose fees associated with checking accounts in clear, simple language. One bank practice that Pew thinks is especially important for banks to clearly explain is the order in which they process transactions, which can affect the number of fees you pay if you overdraw your account.
To help illustrate the problem, Pew’s Safe Checking in the Electronic Age project has created an interactive feature, dubbed “Transaction Infraction.” The tool lets you toggle between two screens that show you how the way in which a bank orders your transactions can greatly increase the fees you will pay. (The example is taken from an actual court case, Gutierrez vs. Wells Fargo Bank).
On the first screen, you can see what happens when the 12 transactions were processed chronologically. Mr. Gutierrez ends up with a negative balance of about $45, and a single $22 fee.
On the second screen, you can see the order in which Wells Fargo actually processed the same transactions. The result is a negative balance of nearly $112, and four fees, totaling $88.
Banks have typically processed transactions in the order of the largest to the smallest, which can increase overdraft fees.