Bank of America and Shareholders Needs Salvation From Hell
Maximizes Overdraft Fees for Banks
by Kristy Welsh
With the new credit card laws about to go into effect, banks are scrambling to replace the usurious income they used to be able to generate through late fees and sudden high interest rates. Overdraft fees on checking accounts are now being referred to in the banking industry as the “motherlode”. The method for maximizing these fees is called “transaction sorting”, a process where banks can clear charges in any order they choose to generate the maximum number of overdrafts.
For instance, lets say you have a $35 balance in your checking account, and pending checks and debit card transactions of $15, $10 and $100. Even if the transaction dates of the $15 and $10 charges precede the $100 check, the bank can choose to clear the $100 check first. Clearing the transactions out of order will result in three overdraft charges instead of one, or $90 versus $30 in fees. In short, the bank took things out of sequence to make more money.
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