Richard Seay has a warning he would like to share: Checking your account balance at an ATM before a withdrawal is no guarantee you won't be hit with an insufficient fund fee.
Seay found that out the hard way.
On one recent weekend, he racked up $210 in insufficient fund fees for six transactions - all after a trip to the ATM assured him he had money in his account.
The Garner, N.C., post office worker paid a visit to his branch office to find out what happened.
That's when Seay learned a lesson about how banks do business.
Seay was told about Wachovia's high-to-low check posting process: When several transactions come in at the same time, the highest amount gets paid first.
Christine Shaw, a spokeswoman for Wachovia, said this is an industry-wide practice. "The real crucial things get paid first, such as car payment or mortgage," she said.
And that's what happened to Seay. He had about $350 in his account on Friday. So that day, he paid a $140 bill with his debit card and made a $40 withdrawal from the ATM. On Saturday, he made another ATM withdrawal for $40 and paid $18.19 on groceries with his debit card at Food Lion. On Sunday, he made a third ATM withdrawal for $20. Total, he spent $258.19.
But on Monday, a $352.45 check - his car payment - came into the bank, a day before an automatic deposit was due, and a day before he thought it would. The car payment was processed before his weekend withdrawals.
And that leads to the other thing Seay learned from his local banker: All transactions from ATMs, online payments, checks and debit payments are processed on weekdays only, Shaw said.
Because this was Seay's first overdraft, the bank reimbursed him half of the fees. But the fees still caused him to fall behind on his car insurance.
Shaw said that customers should find out how their bank processes transactions.
One way to protect against overdraft fees is to set up an overdraft account, she said. That's when you link your checking account to a savings account, money market account or bank credit card. If your account dips below zero, the funds will be taken from the linked account. But depending on the type of account you have, there can be a fee for this service, too.
The high-to-low processing became popular in the mid-1990s when banks started offering overdraft protection programs. The service was designed to help cover payments that would otherwise bounce. But instead of helping, it seems to have dug deeper into customers' pockets.
Banks "are saying that people don't want important payments to bounce," said Laura Bruce, a senior reporter at Bankrate.com. "But then they've got five or six smaller checks they wrote at the grocery store piling up a bunch of insufficient fees. By the same token, banks are making a lot of money in fees."
In 2006, banks received $36.4 billion in revenue from service charges on deposits accounts - which includes insufficient funds and overdraft charges, said Ross Waldrop, a senior banking analyst with the Federal Deposit Insurance Corp. in Washington.
That amount is more than double than that of 10 years ago.
Bruce said that customers should call their bank to get a complete list of its fees. "You would be stunned by how many there are," she said.
Also, Bruce said that too many people still think they have four to five days for a check to clear, and they get caught short of money.
"They need to learn how to manage their account, then they don't have to worry about fees and float time," she said.
Seay said that he knew there was a possibility the car payment check would clear a day early, so he expected to pay one NSF fee. But not six.
From now on, he plans to pay his bills with a money order, as he did before he opened the checking account six months ago.
"I didn't have any insufficient fees doing that," he said. "I just paid 46 cents for the money order, and that was that."
