Look, you're a sharp guy. So I'll explain the details of how this works and you make your own call. At the end of every business day every account is debited and credited for all activity that occurred during that day. After that, transfers are made. If an account comes up short, an error has occurred, usually by the owner of the account. The bank covers the error and charges an overdraft fee. That is traditionally how this system worked. Bank assumed a liability by covering the charge, and charged a fee for it.
Originally Posted by code3retrievers
Now enter the ability to do Time Order Posting. Accounts are still reconciled nightly at the end of the work day. So no money has transfered anywhere until that time. But now the bank, because of TOP, can determine the order in which transactions occurred during the day. The debits and credits post and low and behold a card was used, or a check cashed at 12:00 and the deposit didn't clear until 8pm. There has been no transfer of funds. There has been no liability incurred by the bank. There has been no loan, no interest. Nothing other than a computer record of what happened and when it happened. So for every posting of a credit that occurred you get charged 40 dollars, regardless of the fact that at settlement you did NOT overdraw. Sorry, but to most people, that's a rip off.
As to who gets caught in this trap. It people who live paycheck to paycheck. Young adults who don't understand all the details. Housewives who are spending a day running errands, paying bills, buying groceries, etc. Those are the folks who end up behind the desk at the bank trying to understand how they owe hundreds of dollars for no services rendered.
For me, I don't think banks need to swindle people out of money to make money. There are plenty of legitimate means for Banks to earn their keep. They don't need to resort to thievery.