4) The biggest headache at the TBTF banks is getting something fixed, or finding the right department, or getting through the automated phone tree. Make sure that the service the CB or CU offers is personalized, and performed by a local real person who cares and to whom you have easy access.
5) Ask what the policy is on check holds. An archaic 1988 law allows banks to "hold" checks for up to 14 days in some instances. Because they don't "know" you, the TBTF banks are more likely to put "holds" on your deposits if they contain other people's checks. That 1988 law should be repealed because today, electronic clearing occurs overnight for 99% of all checks. But you already know that the U.S. Congress never repeals anything, no matter how archaic or silly it may be in today's world.
6) Every bank has to process checks. But, how they process them is key, and the answer you receive from this question is a good indicator of how consumer friendly the CB or CU really is. All TBTFs process debits (your checks) first in the order of highest to lowest amount. They process deposits last. By doing this, they maximize their insufficient fund fees, because, by charging the big checks first, they increase the number of "insufficient" fund or "bounced" check fees they can impose if you have several smaller items clearing that same day. And you get the insufficient fund charges even if you made a deposit that day that would cover the checks - because it is processed last. Small banks do just the opposite. They process deposits first, then your checks in the order of smallest to largest, thus minimizing "insufficient" fund fees.
The table below shows an example of this process. The consumer began this morning with a $1,000 cleared balance and the following checks are in the queue to clear: $30, $80, $5, $950, $100. The consumer also deposited $250 in cash the minute the bank opened for business in this morning. The bank charges $20 as its "insufficient funds" fee. (Most TBTF banks charge more than that!) The first table is the way the TBTF banks operate; the second table shows the same set of transactions cleared in a consumer friendly way:
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV