Kinross

Probably legal, do you have your bank contract? See if its in there.

I would change banks. Banks are known for being underhanded. I have switched banks four times in the last two years due to similar issues.

Marruk

Im pretty sure this is not legal, my fiance was part of a class action law suit against b of a a while back for doing the same thing. The bank was knowingly holding deposits as well as checks so that when the checks were cashed it would cause overdraft before the deposits would be entered allowing the bank to charge extra money for the overdraft even though the account holder had deposited enough money to cover the checks.

I would look for a new bank and I would look more into the legality of what they are doing. If you have kept receipts of all of your transactions with them later on you may be able to get back all of those overdraft charges and clear any record that might have been put on your credit report.

I also bank at wells fargo, (i do not have direct deposit) and sometimes they have held deposits but they have not charged me for overdraft if I wrote checks that may not have cleared but then did after they were done holding my checks. They provide this service to me for free without a minimum balance.

oriecat

Bree, I've sent the question to my payroll mailing list. They should know. Heck, I should know, except we don't offer direct deposit.

I know there is an organization that makes rules that govern direct deposit. But I don't know what it is, or what those rules are.

Scotty

Tell them to fuck off and take your money someplace else.

-Scott

oriecat

The organization is the NACHA - National Automated Clearing House Assoc. www.nacha.org I can't find out anything on their website though.

Response I received so far said: "I was told by a NACHA representive at one of our local APA meeting that the money is suppose to be deposited by 9am on the settlement date (payday). "

Have you talked to your payroll department to make sure there wasn't a problem with the ACH file or the settlement date? If not, talk to them and they might be able to help deal with the bank too. Until you change anyway!

clark

It's probably legal, but pretty cheesy business. I would switch banks, or, better yet, find a credit union. A friend of mine is a branch manager for a "major national bank chain" and tells all her friends to use credit unions. The problem with banks now is, with interest rates low, their "spread" is low. It's hard to make money when you're only getting a five or six percent return. To cover for this, a lot of banks are finding ways to charge fees, or causing you to be charged fees.

One way to do this is to hold your funds until cleared. I believe the maximum is six business days. Another way is this scenario: say you have $90 in your account. Expecting an imminent deposit, you write four checks, one for $80 and three each for$25. For whatever reason, the deposit doesn't come. The four checks come due at the same time. More often than not, the bank will clear the $90 so they can charge you NSF fees on the other three.

Some banks are better than others at this. Most smaller banks have less of this gouging than bigger national banks. Credit unions are generally better still.

THOUGHTfully Yours,
Clark

FoE

That's freaking ridiculous. My employer pays me every second Wednesday (hey that's today!) and the money is in my account Wednesday night at midnight, without fail. As far as i'm concerned banks can suck the snot from my nose. They seem to forget who has got the power in the relationship.

Deadbeat

Yeah, the whole point of direct deposit is so that you don't have to wait for a cheque to clear every payday - the money is supposed to be available to you the instant it is deposited, because it's NOT a cheque, it's actually a money transfer.

Ditch your bank, and complain to the Better Business Bureau (or local equivalent) while you're at it.

Bill Snedden

Bree, this may or may not be legal, but definitely sounds questionable.

According to the Federal Reserve regulations (click on the links under the CC for more info), most deposits should be made available no later than the next business day following the day of deposit. It looks to me like the regulations set forth there have been amended to be in line with the Expedited Funds Availability Act (12 USC 4002) of January 2002.

According to those rules, your bank would seem to be in violation. Of course, the catch is, as I discovered by experience, that not all banks receive electronic deposits electronically.

Some banks, usually smaller ones (it was a Credit Union in my experience), actually have no facilities for processing wire transfers of funds and can only handle paper checks. In the case of a wire transfer, the NACH must actually prepare and mail a paper notice of deposit to the institution. Under the Fed regs, your bank doesn't have to make the funds available to you until they receive the notice of deposit.

The upshot is that if your bank doesn't have the ability to deal with electronic transfers electronically, you would be better off to forego the direct deposit or change banks...

Regards,

Bill Snedden

JCS

We went with DD because the mail sometimes doesn't arrive until after 6pm, you know right after the bank closes. Now the funds are availble at 3 AM and all the bank requires is a $300 balance in a savings account, and that includes free unlimited online banking. It's been almost a year since I 've sent any bills through the mail.