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Question About The Costs of EFT

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eyeonic
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Question About The Costs of EFT  Reply with quote  

Admittedly I do not understand money that well. I have tried avoiding it most of my life until recently. That is a whole other story though. Given my some what ignorance about how money works in depth I am extensively curious about why institutions and businesses will charge you fees for payments returned over an authorized recurring EFT withdrawl.

I made a mistake with a bill and gave them the wrong account number. So my payment was returned by the bank. The company I am trying to make payment to however just informed me by mail that a returned payment incurs a charge of $15! The rep never told me this over the phone.

I can understand that using technology over paper might in overhead cost people more for equipment maintenance salaries and utility but most of that should be factored into their regular payment scheduling and fees. Why am I being charged $15 specifically for the fact that an electronic signal was returned to sender due to insufficient funds in an account? That signal shouldn't cost more than a spike of a kilowatt of power on their end.

Does the bank penalize them in some quarter system for having that network setup?? How does this fall on me financially. I made the mistake sure but why the cost?
Post Sat Dec 19, 2009 6:40 pm
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coaster
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Why? Because they can. Mad

I had a situation once where I wrote two large checks. I was planning on covering them, but they cleared much sooner than I expected. Check A cleared on day 30 of the statement cycle and check B cleared on day 1 of the subsequent billing cycle. On day 2, I deposited funds sufficient to cover. (Before I knew about the overdraft or the statement cycle)

In my mind, my account was overdrawn once. But I got charged two overdraft fees. One fee for each billing cycle. I called the bank and they wouldn't do anything about it. I figured I just got shafted by chance occurrence. Perhaps so. And I'm still at that bank. Why? Inertia and rationalization.

Why do they do it? Because they can get away with it and it increases their profits. Evil or Very Mad

~Tim~
Post Sun Dec 20, 2009 3:40 am
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eyeonic
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Thanks for the reply. Normally it would be my first thought to jump on "because they can" but I wondered after I posted the first msg if maybe they are just being nit picky and taking into account the cost of alerting me by mail (paper, system usage, percentages of payrolls involved in the process) and then perhaps it is a profitable tad higher than the actual cost of dealing with the lack of funds and alerting sed customer about their problem.

I mean everything costs money from what I can tell and if they are going to be nice and follow local and federal laws to alert me over the status of my account... I would assume it costs them roughly ten dollars per instance and so 15 seemed like decent compensation. But maybe I am wrong and maybe in the end it all pans out in their favor with or without my 15 dollar service charge.
Post Mon Dec 21, 2009 6:55 pm
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coaster
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I think you're just thinking about this a little too hard, myself. Laws are primarily written for the banks, not the customers. They will do what they're allowed to do to make a profit. Trying to rationalize a fee by itemizing the expenses involved is just a bit too close to the window, in my opinion, and too close to the window fogs it up. Smile

~Tim~
Post Mon Dec 21, 2009 10:30 pm
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eyeonic
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And may I ask what you do for a living and/or in the world of business so that I can better hypothesize your opinion?

Please note I am actually curious. I would be quick to agree with you but I would also like to know where it is that you are coming from on the subject.
Post Tue Dec 22, 2009 8:22 am
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coaster
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I'm retired, and curious as to what that has to do with my opinion on this particular topic.

~Tim~
Post Tue Dec 22, 2009 6:50 pm
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