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Bank, What Have You Done For Me?

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I really liked banking at my local bank.

There are so many up-sides to community banks: they employ your neighbors and friends, they sponsor local events, and they are quite literally "invested" in the region itself; it somehow just feels friendlier.

I probably have five assorted tote bags, two umbrellas, and umpteen water bottles with my bank's logo on it.

Bank, What Have You Done For Me?I had an account there since I was a teenager so I was actually quite comfortable with this part of my financial life.

And then the unthinkable: CORPORATE BUYOUT.

I'm sure this has already happened to you. And if it hasn't, believe me, it will.

Bank mergers are a fact of the marketplace, especially in a churning, staggering economy.

The best defense is to be informed, because you can be sure that rules and policies and methods of operation will be changing.

My experience was not a good one, so here are some problem areas to anticipate: 

  • Product bundling - I called in to the customer service lines early, and in reviewing my account I learned that all customer accounts had been defaulted into some sort of "premium" bundling package, which, unless you had an obscene amount of money tied up in the bank, required a yearly maintenance fee. I had to actively opt-out of that and into a "budget" checking account in order to avoid any such fees.
  • Overdraft protection - My previous bank would pay out debits in an overdrawn account and then charge overdraft fees accordingly. There were additional penalties if the account was not replenished/reconciled within three business days. Fair enough. The new bank did not offer overdraft protection in the same way. I had to either open a line of credit (would not and did not want to go for that) or pay a few hundred dollars as an overdraft "deposit." In the end I ended up with no overdraft protection, so checks would have been returned as unpaid items and debit transactions would have been declined (a harsher but probably better way to go).
  • Fee increases - Let's just say the new bank was not as "forgiving" when meting out penalties.
  • Posting of deposits - Oh boy, this was the big one. It pays to familiarize yourself with your bank's policy on daily reconciliations! With the local bank, they posted deposits first. So as long as your account was in the black by the end of the business day, you were solvent. So maybe a check posted at 2 p.m. and your account had dipped into the negative by a few dollars. If you made a deposit before the end of the day, everything was hunky-dory. Not so with the new guys! They work strictly on a time-stamp model. Money's not there at 2 p.m.? BAM! Check returned, overdraft fee imposed. Did you make a deposit at 2:05 that would've helped? Well, you were five minutes too late. The time-stamp model is particularly risky and challenging for someone like me whose employer does not offer direct deposit. I closed my account for this reason and moved to another bank that offers"deposits first" reconciliation.
  • Timing - When exactly is the end of the business day? Though the bank was open until 7 p.m., anything deposited after 6 p.m. was counted as a credit for the following day, even though it was accepted that day. Simple, right? Also, check deposits took at least two business days to show as available funds, whereas they used to be available at the start of the next business day. Apparently, it now depends on what bank the check is drawn on, where it is geographically, whether it's a payroll check or not, and ad infinitum.
  • Disclosures - Read them! I did, and I still got tripped up. Call customer service, talk to the bank tellers, and ask questions of the manager. Do whatever you need to do to know what's going on and more importantly, determine whether or not it complements your financial life and lifestyle!

Bank mergers are such a widespread horror story, I'm sure there are more tips to be aware of and pitfalls to avoid based on your experience.

Please share any words of wisdom you may have to make us better money managers and consumers!

Related links:

What is "Free" Going to Cost You

Balancing my Checkbook Sucks

Nightmare on Wall-Street How Does it Affect You

Stacey PavlickStacey Pavlick

Stacey is a participant in the CareOne Debt Management Plan; soon to complete her second year on the plan. She is a contributing writer for the My Journey out of Debt blog. Stacey works as an operations manager for a title insurance company and moonlights as a music reviewer for SpectrumCulture.com. She combines her passion for writing with her passion for getting out of debt and shares her struggles and success along the way. Compensated CareOne Blogger. Read some of Stacey's previous posts in the blog Single and Settling In.

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  • "So as long as your account was in the red by the end of the business day, you were solvent."

    Two things. 1. An account "in the red" has a negative balance

    2. Solvency is a measure of an entity's long term liquidity. Liquidity refers to an entity's immediate access to cash.

    Also, every single thing you highlight as a problem with your new bank is either a) completely avoidable ( stop overdrawing your account) or b) common knowledge (read the fine print).

    Keep managing operations at a title insurance company and take a journalism class, Stacey.

  • Bryan, Wow! Pretty harsh words. Mea culpa on "in the red" - that was indeed a careless mistake. And "solvent," as I used it, was intended to indicate "capable of meeting financial obligations." Anyway, my point here was that as banks merge, policies change. It's in everybody's interest to read that fine print, and I don't think a lot of people, for whatever reason, do that. Thank you for reading, I'm glad that you seem to have everything all worked out!

  • So basically your problems with the new bank boil down to "I like to spend more money than I have, and I think the bank should be okay with this." Am I getting that right? Easy answer for that - don't spend what isn't there.

  • For folks like me who don't have employers who offer direct deposit, bank policies concerning daily reconciliation and availability of funds are important to know and not immediately apparent, even in that fine print. These policies vary from institution to institution, as I found out when my bank went through a merger. Of course I'm not advocating check kiting by any means, I'm sure I don't suggest that here. I *do* think people should familiarize themselves with how their bank works so that they can make informed decisions. I'm sorry if that message somehow got lost.

  • It sounds to me that your bank sold out, because it did not know how to run a business.  I work in the banking industry and a lot of the things you are complaining about are common amongst all banks.  Checks take time to clear and you should not be spending more money than you have available to you.

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