An expensive mistake, and a request for recommendations

[old fashioned]

Lady Henevere don't close your accounts until after you've checked with other banks first to see if you can get a new account.
But whether you stay with your current bank or go with a new one, use this experience as a learning tool. I've rarely had a problem in 30+ years of banking, don't have od protection, do use a debit card for living expenses and write checks for bills. I'm too afraid to have auto withdrawl, just in case I forget a bill is coming and I like to have that control over my money of when & how to pay. I do have a credit card (please don't tell dh ) that is paid off and I don't use it, but it is there just in case.
When I sit down to do the bills every pay day I calculate the income/deposits low and the bills high. This usually averages about $5 per paycheck. I also keep a very sharp eye on the bank account to be sure what checks have cleared or still outstanding, any spending by dh or myself to determine our normal habits vs bank balance. I try to not let it get below $50 within 2 days of payday. If the money is not there, we go without.
This may or may not work for you but if you do keep some kind of cushion in your checking account that is NEVER touched by any means you won't have account problems. Best of luck on whatever you decide to do with your money.

 

[Lady Henevere]

OF, thank you. That is very good advice.

I did get a new checking account. I went with a bank where I am already a credit card customer. It's my emergency card and I never use it, but I've had the account for a long time. My account was approved, so now I have two checking accounts open. Next comes the transition - changing direct deposit, auto-deductions, etc.

 

[chickabidee]

Geesh. My heart goes out to those here who have been through this excruciating ordeal!! We have just recently been there too and DID switch banks. I'm really glad we were able to get another account at a different bank and had not been blacklisted ... I didn't even know that was an option for a bank.

We own our own business and over the summer one of our national clients went bankrupt leaving us with an enormous amount of invoices unpaid. Paddling up creek all summer, dumping expenses and liquidating.

It was near impossible to track our account:

1. The bank totaled up the number of insufficient fund fees you incurred throughout the month and then took that amount out at the end of the month.
2. Vendors have the option to not submit your transaction right away.
3. Our income is variable.
4. Our bank didn't show pending transactions after the first day they posted.

Between the insufficient fund fee, the actual amount at the end of the month they take out, the fee for not having enough money in your account, the disappearing pending transactions, and the variable income, we just opted to use cash. We have so many bills to catch up on for the business and our home (4kids) that putting the money into the bank so they could hit us for fees because we had a hard time tracking the account was just too painful, and made no sense. javascript:insert_text('',%20'');

When we made this decision there were two payments left to go through on the business account, not having the money to put in we knew we were going to get hit, but there was nothing we could do. We had run dry (business is always slow in August/Sept for us), and were keeping all our money for the personal account.
We had saved up enough to pay our mortgage, which was looming on three months past due. Yup, that's how close we are to the edge. All we had in the account was enough for one months mortgage so we could keep it from going into the three month foreclosure status. When all of a sudden with NO WARNING the bank went into our PERSONAL checking account and TOOK out the money we had saved for the mortgage payment and transferred it to the business account to zero it out!!! javascript:insert_text('',%20'');

Not only did our mortgage go 3 months past due but we got hit with over 600.00 in insufficient funds fees during the 2-3 days before we figured out what they had done.

Before THEY started to manage my accounts I would have liked just one phone call/letter/e-mail.
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Being frugal our family has had a movie night each week. We have no cable, so I went and rented a movie for a dollar ... ended up costing me $74.00 in fees and 1 dollar for the movie. Seriously??? Legal or not ... it's a crime.

The bank we switched to has given us the ability to check our balance from our phone, and they post all pending transactions continuously until they have gone through. Plus we have the overdraft through our savings, if we have anything in there!

I know we will come back out on top. Business is busy again and we are being frugal ... watching every dime. I just wish we had switched banks sooner. Good luck to you ....

 

[Big Daddy]

Having 2 accounts in one bank is the same as having one account. Funds can be transferred at any time from one account to the other. I have 2 accounts in 2 different banks. I was not aware of that fact but picked it up listening to Tom Martino. If I ever get laid off I will stop making payments on my obligations and use what money I have to rent a much smaller place than what we have a mortgage on. Then we will hunker down and live off my 401k. I know I'll have to pay early withdrawal and all that but at least we'll have a roof over our heads. In this economy it will take a long time to replace my job. At 51 years old it is doubtful.
Good thing you brought that up about the 2 accounts. A lot of people don't know that.

 

[Lady Henevere]

Update: I wrote the bank a nasty letter threatening to take my business elsewhere and sue for the return of my money. The bank wrote back and said go ahead. So I am transitioning to the new bank (I'm surprised at how long it takes to switch direct deposit to a new account), and then I'm off to small claims court. Unless I want to get really nasty and contact a plaintiff's firm and offer to head up a class action, but I probably won't go that route.

Also, based on some of the comments here (thank you!), I have changed the way I spend by taking out in cash what I will use in a week and not using my debit card at all. It makes me pay more attention to what I am spending, and I am saving money, which is nice. (Well, I was saving money until last week when we ate out a bunch of times because I've been working long hours and I didn't want to cook.) But overall it's a good change.

 

[MissJames]

Update: I wrote the bank a nasty letter threatening to take my business elsewhere and sue for the return of my money. The bank wrote back and said go ahead. So I am transitioning to the new bank (I'm surprised at how long it takes to switch direct deposit to a new account), and then I'm off to small claims court. Unless I want to get really nasty and contact a plaintiff's firm and offer to head up a class action, but I probably won't go that route.

Also, based on some of the comments here (thank you!), I have changed the way I spend by taking out in cash what I will use in a week and not using my debit card at all. It makes me pay more attention to what I am spending, and I am saving money, which is nice. (Well, I was saving money until last week when we ate out a bunch of times because I've been working long hours and I didn't want to cook.) But overall it's a good change.

You would think the bank would want to keep your business..Very short sighted of them.
I may have missed this if already mentioned,but the envelope method can be an excellent way of keeping spending under control.One envelope for grocery money,one for gas,one for incidentals,lunches out,coffee breaks,whatever you have budgeted.It keeps you from straying off the budget and helps you keep track of what's going out.
I personally find it much harder to part with my cash! LOL
With kids though,I do like using a debit card at the gas pump.I hate lugging the little ones inside.

 

[Bettacreek]

I did the same thing. I had no idea what had happened. When we noticed that hundreds of dollars were missing, I called because I thought someone had hacked my account. They were very unforgiving, and refused to even reduce the amount. We had overdrawn by $200, and ended up with $600 in overdraft fees. I stopped using that bank and switched over to the PA credit union. The boyfriend was having issues with M&T bank and has just now switched over to PSECU as well, after I explained the union to him. So, IMO, if you have access to a credit union, definately switch some stuff around and get an account with them. Some may have a fee, mine, they hold onto $5 until the end of the year, then it is used for the account fee. I get to collect any income on that $5 (which isn't much, but, it's better than nothing). If I overdraw, they will either pull it from my savings account (I set it up this way), or if there's none in there (I'm poor like that), they wait until money is put in there. I guess there is a fee if I don't put money in it, but I'm not sure how long it takes, as I have gone a week before with an overdrawn balance.
Other than that, cash would probably be best. Use the biggest bills that you can get. Personally, it's harder to break a $50 or $100 bill than it is to blow fifty or one hundred individual dollar bills.

 

[lalaland]

umm, the reason the banks don't care about this is:

a. you are probably banking at a chain national bank, right?
b. you probably have less than an average of 1 million in your accounts, right?
c. banks are a for profit institution, and that is quite a profit for them, and your small (in the banks eyes) account doesn't matter a heck of a whole lot to them

I worked temporarily for a national chain bank business call center about 4 years ago and learned enough to encourage all my friends and family to leave the national banks. Here's one example out of hundreds: Small business in small town on the maine coast. Bank teller (poorly paid, little training, lots of turnover) was supposed to put a hold on one check on this account, but accidentally put a hold on the entire account. 4 days later, this small business had 52 of their checks returned because of this error - their suppliers furious, small town rumors about business health, ruined a business deal, the small business also had to pay lots of charges/late fees, etc, all due to bank error. The max I could get for this customer? An oral apology. Nothing else. Why? because they averaged less than $500 thousand as a daily balanace and so counted as a small account and not warranting anything else. Made me so angry I pushed this past my supervisor, to hers, and hers and hers....made a big stink and got no where except a suggestion that I seek other employment.

Go to a very small local bank, or better yet, a credit union!

The debit cards are a profit center for banks (plus, cheaper than checks for the bank). They DON"T want to help you avoid late fees, etc.

I heard that there is legislation pending that would require banks to allow customers to opt out of having the bank let transactions go thru on debit cards when the account doesn't have enough. Banks say they don't want to embarass the customer by rejecting the transaction, so they pay it for you until you get money in your account. So you could choose to experience the "humiliation" of having your card rejected in exchange for not paying $35 for a dollar hamburger.

 

[chipmunk]

That's an eye-opener, lala. Makes me think it might be worth our while to investigate a credit union.

Personally, I would prefer the "embarassment" of finding out I didn't have the funds in my debit account at the point of sale, rather than 2 days and hundreds of dollars later. Good grief. What a transparent spin on the facts

 

[Lady Henevere]

I thought about going with a smaller regional bank rather than a national one, but that's what I did last time and ended up at a national chain anyway since the small one got bought. Plus I was afraid of the blacklisting on checking accounts mentioned in earlier posts, so I went with a national bank where I have a credit card account already. I'm not thrilled about letting them hold onto my money, but I don't really care that much since they won't be getting any fees from me. Free checking, no debt so no finance charges, no more overdrafts or other fees -- they work for me now, and I will not pay them for that privilege. That's my new attitude.

Yes, the Federal Reserve Bank has passed new limits on overdraft charges. See http://www.npr.org/blogs/thetwo-way/2009/11/federal_reserve_reins_in_bank.html What my bank did to me in October, for example, would now be against the rules. Congress is working on even stricter measures. See http://online.wsj.com/article/BT-CO-20091203-714979.html