Being Nice to a Customer Bites Me in the Bum

[Brojekk]

Hello Veeza...do you take Mistercard?

[taxguykarl]

Tell me you're not seeing the underside of a bus over this nonsense.

[Ghel]

No, not at all. I brought up this customer at the past due loan meeting this morning. Even Goodhair agreed that we'd given her a chance to redeem herself, so we won't be doing her any more favors.

[morgana]

My sister is like that. There will be a surprise or emergency (usually her husband being an @$$ and writing checks without caring how may bills are due),

Your sister is married to my ex-husband?

[CrazedClerkthe2nd]

If I were Goodhair I'd have probably said no to the first exception.

[otakuneko]

My mom would probably be this woman... if I didn't have power of attorney for her and full control of all her financials.

[Primer]

Hello Veeza...do you take Mistercard?

Back in the mid to late '90s, credit card companies were really aggressive about opening new accounts, and sending out balance transfer checks that carried no fees, and only the regular account-level of interest.

I got into a bind one summer, and really did use Visa checks to pay MC, and MC checks to pay Visa. I always included enough of my own "real" money to make a slight dent, but since each account got "paid off" every month, I wasn't paying any interest on either account.

Thank goodness I learned my lesson about credit cards!

[Shalom]

I could swear I read the following conversation, many years ago (possibly in Readers' Digest, one of their humor pages):

-- How much is the bounced check fee?
-- $15.00, ma'am.
-- OK, I'll just add that amount to the total of the check...

[greek_jester]

On a side note, the concept of taking out a loan from the same bank that one owes overdraft fees to just....boggles my mind (which has been boggled quite a lot lately, and none of it enjoyably). You just end up owing the same amount of money...no, more, with interest!...to the same place. What's the point?

It's to do with the nature of overdrafts and loans.

A loan is a signed contract, with interest, penalties, etc. stated clearly and in advance, along with what methods the bank will use if payment is not made. While this is good from the bank's point of view, it's also good from the customer's point of view; the bank has to jump through a series of hoops before they can take the customer to court, including mediation which limits the interest the bank can charge if the customer is unable to pay the full agreed amount but is willing to pay a reduced amount until their circumstances allow them go back to the original rate (in the UK at least; recent legislation changes have set a maximum amount lenders can charge in interest and penalties to combat payday lending companies).

An overdraft, however, is unsecured. The bank can, at any time, demand that the overdraft must be paid in full before the end of the day or the customer will be taken to court, with all the extra fees and the ding to their credit report that this implies.

This actually happened to one of our clients (I'm an accountant); the business had been treating the overdraft like a savings account, never paying it off and constantly dipping from half-way through it to right on the line (or sometimes over). When the bank put their foot down he had to go into the bank that day, take out a loan from them (he didn't have time to shop around and get his credentials in order to go elsewhere) and start actually paying the loan back. Three years on the loan is nearly paid down and he only went overdrawn once when someone took a direct debit a week early (he got a nice chunk of cash for that debacle; between them repaying his unauthorised borrowing fees, the bounced cheque fee that wouldn't have happened if they hadn't drawn the money early, plus a bit of money to compensate for the time he spent on the phone trying to sort things out with everyone it added up to about £200).

[Ghel]

To confuse things further, some banks (like mine) offer an overdraft line of credit that is attached to the checking account. If the checking account is overdrawn, the line of credit is automatically drawn on (ours goes in $100 increments) and deposited into the checking account to cover the overdrafts. Then the line of credit is paid back by automatic payments from the checking account.

[mikoyan29]

I don't know how many times I'd see a shopping cart brimming with stuff and then the customer saying, "Well, I only have $20" (this was back in the days when $20 could get you quite a bit) or something like that. I knew that I was putting stuff back later. The best one was when I rang up the order and the total didn't agree with whatever math the customer used in her mind....so I voided the entire order and re-rang it.....she still didn't believe it despite being the same exact amount.

Gah....

[taxguykarl]

To confuse things further

No kidding about confusing.
So the only advantage of the line of credit, IMO, is that the checks don't bounce like basketball during March Madness. Am I reading this right, Ghel? As deposits cover overdrafts sooner or later. I can recall one orientation where the speaker noted that direct deposit does not mean automatic availability if the account is in the negative.

[Ghel]

So the only advantage of the line of credit, IMO, is that the checks don't bounce like basketball during March Madness. Am I reading this right, Ghel?

Basically, yes. Since we generally do not allow overdrafts unless there's extenuating circumstances, the line of credit is a way to avoid overdraft fees and bounced checks. The interest charged on the LOC is usually far less than the overdraft fee would be.

As deposits cover overdrafts sooner or later. I can recall one orientation where the speaker noted that direct deposit does not mean automatic availability if the account is in the negative.

Assuming the customer continues to have deposits. (We had a customer recently who tried to close his checking account by drawing it down to $0, but he still had a balance owing on his overdraft line of credit. We had to track him down to get him to pay it.)

The available balance on a checking account is the balance of the checking account plus the available portion of the line of credit. For example, if you have a $200 balance in checking plus a $500 overdraft line of credit, your checking account will show an available balance of $700. If you've used $100 of that line of credit, your available balance would be $600.

I think what the speaker was talking about was that, without such an overdraft line of credit, any deposit would first go towards paying any overdrafts before being made available for withdrawal. With our overdraft lines of credit, we only take a partial payment each month until it is paid off. A customer could pay extra, if they choose, but that doesn't happen automatically.