Right now, I'm sitting at the Intermezzo Cafe, on Walnut Street. The cool thing about it is that they have a free wireless connection, which means I can email my Payment Systems homework to the professor from here.
About Payment Systems. We're finishing up guarantees, and will be looking at banking the poor next. Many people know that I don't really think that highly of banks. Citizens's Bank, for example, will happily pyramid charges on overdrafts, in addition to using "biggest withdrawal first" rules that ensure you get nicked for as many NSF charges as possible. Now, you might claim that it's my own fault for failing to have enough money in the account, and that's true. But since it's a complete crapshoot as to when deposits will clear and become available or when payments will actually be processed, I lack any sympathy for the bank. And, the charges and fees the bank levies, directly from my account, are completely disconnected from their costs for processing. A typical check overdraft costs a bank about oh, maybe 10 dollars to process. They will neg your bank account $30. That's $20 dollars of pure happy profit for shareholders.
2 comments:
I think you're estimating too high on the bank's costs. I was told, not so long ago, that it was less than $5.00...and in some cases only $1.00 to process an overdrawn check. And with the addition of Act 28 or Check 21 or whatever the hell it ended up being called, my personal check can be extracted immediately through electronic funds, but my paycheck still takes a day or so to clear depending on when they actually take the time to process everything. Makes for an interesting situation during the last week of any given month into the first week of the next month.
Howdy Bill!
The cost of just bouncing the check according the report at http://www.consumerlaw.org/initiatives/test_and_comm/appendix.shtml was $1.50 in 1998. I wanted to be generous to the banks on the point, since I reckon they can reasonably count their losses from actual fraud (ie people who write checks knowing there's insufficient funds.)
You're right, Check 21 shifts the value of float (a vast sum, considering the number of payments in the universe waiting for checks to clear) from people making payments to banks (which can still limit availability of funds to the depositing account, even though the deposit clears more quickly.)
And Check 21 allows banks to "truncate" the physical paper checks, allowing them to do an electronic presentment. Thus, they can rid themselves of the costs of storing and transporting the pieces of paper, while still charging exorbitant fees.
I hope your bank sends you a nice thank-you note for letting them use your money for a week or two at the end of the month before they have to allow you to use it.
Strangely, all I ever get from Citizens is a candle at Christmas.
Post a Comment