CLOSE-UP: WHATS IN THE FINE PRINT?

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CLOSE-UP: WHATS IN THE FINE PRINT?

Published by sam - 28/08/07 - 12:08:07 am

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Most ordinary checking accounts do not have the kind of contractual fine print associated with the loan agreements. These are few regulations governing checking accounts, so most of the details of the account are found in promotional brochures, pamphlets, and advertisements.

However, checking accounts with a debt card attached to them often have a page or two of fine print. Debit cards, also known as bank cards, fall under the regulations contained in the federal Electronic Funds Transfer Act. Look for several items in your bank-card agreement:

Your Liability for Unauthorized Transfers
The agreement should outline your liability. By law, if you inform your bank about a lost or stolen card within two business days of your discovering its loss or theft—not two days from when it was actually lost or stolen—your liability is limited to $50. (Many banks have 24-hour phone numbers for reporting lost cards, making it even easier for you to meet the two-day deadline.) If you do not tell the bank within two days, your liability could be as high as $500. Beware of misleading phrases like this from one bank’s agreement: “if you do not have overdraft privileges or a credit line for a particular account, you could lose all the money in that account if someone used your debit card and/or (personal identification number) without your permission”. That statement is tricky; in most cases, the $50/$500 limits under the law will still apply. You can conceivably lose all the money in your account; however, you would have it fail to report the unauthorized transfers for more than 60 days after transmittal of the monthly statement. You would still only for up to $50 of unauthorized transfers that occurred during the first 60 days plus all unauthorized transfers that occurred after the 60 day period and before notification to the bank—if the bank can establish that those losses could have been avoided if you had notified it promptly. But if your failure to notify the bank within 60 days is due to such a matter as hospitalization or extended travel, the 60 day limit would be extended to “a reasonable time”.

By law you also have 60 days to notify the bank if you find an authorized transfer on your monthly statement. The postmark on the statement mailing envelope starts the 60 day clock.

According to a recent report by the Comptroller of the Currency in Washington, not all banks follow the federal regulations regarding lost cards. Some banks have denied liability limits to customers have either written their PIN on the card or have revealed the PIN to a friend or relative who later made an unauthorized withdrawal. Liability limits are based only on the time between discovering a card lost or stolen and reporting it missing; the limits still apply, no matter how an unauthorized user obtained your secret code number.

The fine print may omit the fact that your liability is zero if unauthorized transfers are made with a debit card you never received.

Limits on Transfers Each bank sets limits on the amount of money you can withdraw on any one day. If you are planning to withdraw $2,000 from an ATM for a trip while on your way to the airport, a $400 daily limit can cause trouble. Find out what the limits are – especially for weekends, which some banks consider to be “one business day”.

ATM Transaction Charges
What does the bank charge for various ATM transactions? Only 23 percent of banks in a 1988 Consumer Reports survey charged for ATM use. In the future, though, as the honeymoon period ATM ends and banks decide to have those machines pay for themselves through transaction charges, such fees may become more common.

Disclosure of Account Information to Third Parties
Even if you do not have a credit line, some banks reserve the right to provide credit bureaus with informations about your checking account. This is an invasion of consumers’ rights to privacy for which depositors receive nothing in returns.

Correction of Errors
Your debit card agreement should outline what you must do if an ATM doesn’t give you the $50 that it claims it did. The fine print will take you only as far as this: “If we decide that there was no error, we will send you a written explanation within three business days after we finish our investigation.” What do you do if you disagree the bank’s final verdict? You can obtain a copy of the investigation report and sue the bank. You should also report the problem to the appropriate federal or state agency that regulates your bank, as well as to local consumer affairs offices.
In the area of disputed deposits, canceled checks are proof that you made an ATM deposit. When you make cash deposit to a human teller, he or she will verify the amount and mark you deposit ticket in your presence, making it a legal receipt. According to a consumer finance handbook published by a subcommittee of the U.S. House Committee on banking, Finance, and Urban Affairs, receipt from cash at an ATM are equal to a canceled check.

Instant Cash for Deposited Checks
Some banks allow you to cash a check if the bank can put a hold on your other deposits—such as those in a savings account—until the check clears. Certificates of deposit (CD’s) can sometimes be used for this purpose. But if the deposited check is returned because of insufficient funds and the bank has to pull funds out of your CD to cover that check, you could be charged a” substantial penalty for early withdrawal” on the CD.

Notice in the Mail
When you receive your monthly statement, other papers often are included in the envelope. Some of these are advertisements for loans or other services. Others, however, may be important notices about policies governing your account. Check all papers accompanying your monthly statement before throwing them out. Retain notices about account policies for your records.

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August 28, 2007 | Checking Accounts, Banking |

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