As a banking customer, you may be well aware of the fees associated with your checking and savings accounts. Out-of-network ATM fees, overdraft fees, maintenance fees and minimum balance requirements are well-known facts of life in modern banking. That’s in part because these sorts of banking policies often affect your everyday usage of your money.
But banks have a number of less familiar policies that also can affect your bottom line. Unless you know about such policies ahead of time, you’re likely to be caught flat-footed when they happen. And since these policies can vary from institution to institution, you may not know about bank rules that could cost you.
Here are six banking policies that might creep up on you if you’re not aware of them.
1. Ordering Transactions From Largest to Smallest
On days that you make several transactions from your checking account, you probably expect the transactions to clear in chronological order.
For instance, you might grab a $5 coffee on your way to purchase $100 worth of groceries one morning, and stop on the way home to fill up your gas tank for $35 before making your $1,250 mortgage payment in the afternoon.
But instead of processing your transactions in chronological order, your bank may be artificially ordering your transactions from largest to smallest. So your institution will debit your $1,250 mortgage payment first (even though it was your last transaction of the day), followed by your $100 grocery purchase, then your $35 gas fill-up and finally your $5 latte.
Reordering your transactions so they are debited from largest to smallest makes no difference whatsoever if you have enough money in your account. But, if you are in danger of overdrawing your account, ordering your transactions from largest to smallest means you could get hit with multiple overdraft fees.
Let’s say you only had $1,000 in your account on the day you paid for the coffee, groceries, gas and mortgage. If your bank debited transactions in chronological order, you would only pay an overdraft fee for the mortgage payment. But, by debiting the largest transactions first, each transaction triggers its own overdraft fee. Dealing with four overdraft fees in one day can add up quite a bit when such fees average around $30 or more, according to the FDIC.
Avoiding the negative fallout from this policy will require you either to keep a comfortable cushion in your checking account or to keep close tabs on your available balance before making purchases—or possibly to do both of these things at the same time.
2. Holds on Check Deposits
Depositing a check is not an instantaneous transaction. Not only does the issuing bank need to release the funds to your bank, but also you may discover that your bank places a hold on the funds to protect itself from the possibility that the issuing account is overdrawn or the check itself is fraudulent. It’s important to know when your funds will be available. Also, the amount of time your bank can hold a deposit depends on how large the check is.
In particular, the federal government has set maximum hold times for paper check deposits:
- Checks for $200 or less—deposited in person at a branch or an ATM or night deposit—must be available the next business day after deposit.
- Checks for more than $200 and less than $5,000 must make $200 available the first business day after deposit, with the remainer available on the second business day.
- Checks for $5,000 or more must make $200 available the first business day after deposit, and can be subject to a “large deposit” exception, which may vary by bank.
- If you deposit a check at an ATM other than your bank’s ATM, the check can take up to five business days to clear.
These are the maximum legal hold times, so banks may have more relaxed rules regarding check deposit holds. However, it’s important to remember that your deposit may not be available immediately, especially if you are planning to use the deposit right away. Make sure to determine how long you can expect to wait for your deposits to be released before counting on the funds.
3. ATM Withdrawal Limits
While most of us only hit up the ATM for enough cash to cover drinks at happy hour, you may occasionally need a larger chunk of cash than that. If you find yourself in need of cash after bank branches have closed, however, you might find yourself stymied by the ATM withdrawal limit.
Every bank imposes limits on how much you can withdraw from the ATM each day. This is partially to protect you from the possibility of a thief stealing your card and PIN and emptying your account. The amount you are allowed to withdraw from an ATM can vary from bank to bank, but the typical limit is around $300 to $500. Limits also may vary depending on the type of account you have; certain premium accounts may have daily ATM withdrawal limits of $1,000 or more.
Accessing more cash than the limit can be difficult. You may be able to call your bank to get a temporary limit increase on the spot. Or you may decide to make a purchase with your debit card and opt for cash back (daily debit limits often are higher than daily ATM limits). But even these workarounds may not allow you to access all the cash you need.
4. Savings Transfer Limits
Until April 2020, the Federal Reserve’s Regulation D limited the number of “convenient” outgoing transfers from savings accounts to six per month. Convenient outgoing transfers include checks, debit card payments, ACH transfers and automatic bill payments. Banks were legally required to warn customers when they exceeded six transfers per month, as well as freeze, close or reclassify accounts that went over the limit repeatedly. Many banks also levied a fee for going over the six-transfers-per-month limit.
However, partly in response to the COVID-19 pandemic, the Fed has removed this limit in order to help banking customers more easily access their funds. In March, the Fed reduced banks’ reserve requirements such as to make the distinction between transaction accounts (such as checking accounts) and savings deposits (savings accounts and money market accounts) no longer necessary. As of now, there is no expiration date for this change.
Although the Fed no longer legally limits transfers out of savings, individual banks still can impose limitations of their own and still can enforce those limits with fees. This could affect your ability to access your money when you need it, so it’s important to understand any savings transfer limitations before you exceed them and potentially incur bank fees.
5. Ignoring the Date on Post-Dated Checks
Although the art of check-writing has mostly become a thing of the past, one reason some checking account holders may keep their paper habit is to better control when money leaves their account. Such check writers may assume that they can place a future date on a check to prevent money from leaving their account until the date appearing on the check.
Unfortunately, banks are not required to honor the date written on your check. If you write a check with a date two weeks in the future (after which point you will have received your next paycheck), your payee’s bank may well process the check and pull the money out of your account as soon as they receive it—even if the date on the check is weeks away.
6. Minimum Daily Balance Fees
Some bank accounts charge customers a fee if their account balance dips below a minimum amount. This minimum balance requirement is often based on your average monthly balance. This means that even if you have a day or two during the statement cycle where your balance was below the minimum as of the close of business, you can still avoid triggering the minimum balance fee if your higher balance for the rest of the month averages out the low days to an amount higher than the minimum.
However, some banks assess minimum balance requirements daily rather than using a monthly average. In that case, you could find yourself on the hook for paying the minimum balance fee even if your balance only dipped below the threshold for a single day during the statement cycle.
Banking Customer Beware
Your banking institution’s rules and policies aren’t always going to serve your financial needs, and running afoul of one of these lesser-known policies could cost you.
Familiarizing yourself with the bank policies that may be hiding in the fine print can help you protect yourself and your money.
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