Online Banking.....Is It A SCAM!!!!
 

I need to vent about this, it's been bothering me for a while now.

In July I applied for online banking, paying bills was consuming a big chunk of free time and I needed to consolidate it. Anyways I've been using it for the last couple of months now and I've noticed something which IMO is a scam. Here is an example to help everyone understand.

1. On January 1st I request a bill to be paid in the amount of $1000.

2. The bank will immediately remove that sum ($1000) from my account on January 1st.

3. 3 -4 Days Later (January 4th) the payment arrives to it's destination.

Does anyone see anything wrong with this.:confused: :mad: .

Let me explain further. I called my bank and asked them how they made payments after I've requested a payment. Their response "We wire transfer the money". So why the hell do they need to remove the cash from my account 4 days prior!!!:mad: Technically they can take this cash and add it to their general account for 4 days and make a % of profit on it before payment. You may not consider this to be a "Big Deal" but when you consider the sums of money trading hands this is a huge moneymaker IMO. On top of this they have the audacity to charge for online banking.

Am I wrong? Can someone explain if this thinking is incorrect or do I have a good point here. I'm not a banker so set me straight if you have to.

That's why I don't do "online banking". I want control of my money, not some yo-yo computer system.

It seems there is always a delay in transferring funds electronically, but you can make it work to your advantage. Rather than using your bank account to "push" the money to the creditor, use the creditor's online payment feature to "pull" the money from your bank account. I've been doing this for a few months now with a couple credit cards and MB Credit for my car. You can wait until the very last minute to submit your payment online, the creditor counts it as being "on time", but the money doesn't come out of your checking account to 2-4 more days.

BTW, I would never sign up for automatically recurring transfers. Having someone else (or a computer program) decide when to take money out every month would really give me the creeps.

Edit: I also had a problem when I tried to "push" money from one account to another with the same bank. I did an online transfer because I needed the money in a hurry. Everything was done according to their directions, and yet they "lost" the money for over a week. Yet another reason to pull rather than push.

Re: Online Banking.....Is It A SCAM!!!!
 

Yes, I see the problem. You applied on July first. It is now October 1. You asked to make a payment on January 1, which does not fall between July and October. :o

Rick,

Good point regarding reversing this to your advantage, I may consider this if I can't find a valid answer to my questions. It just isn't as convenient and I would need to go to 20 websites instead of one. It's more time consuming not to mention several accounts don't have online payment so I haven't reduced my time significantly.

Regarding Automatically recurring transfers, that's not what I'm using. My bank allows me to enter each of my accounts on a personal website only I have access to. The format I use requires me to input the transaction amount and the date of the transaction for each account and I have to enter this every single month. They will not send this money automatically so I have complete control of making the payments and I've cut out checks and postage. What took me hours now takes me 5 minutes.

I have no problem paying $5.00/month for this benefit but I'm still fuming about the 4 day delay. Anyone have a good answer?

Smakbat,

"Second, was this over a weekend? that could effect the landing of the money. If it was not a weekend and they take four days to wire (yeah right), then they are making tons of money on you."

It's not over a weekend, that is exactly my point. Hypothetically:rolleyes: I have asked them to make the wire transfer on Monday January 1st, they remove the money from the account on Monday January 1st and it takes them 3 -4 days to wire transfer the money to the recipient. I feel like they're totally ripping me off!

Your're right about that used car tactics they use. They advertise "this and that" but in reality they're tactics to get your money! I can't believe we put up with it and unfortunately every bank is the same.

you must put together for yourself for each individual transaction in question: a detailed transactional timeline, review & understand the processing rules for each organization, pertinent exception rules for each organization, regulatory guidelines applicable to each organization/ transaction.... then form your personal opinon to the Q

there are many many variables that may render each situation :reasonable vs. unreasonable

hope this gets you started (vs. being swayed by or accepting opinion absent all the facts)

-fad
(former Bank Examiner, U.S. Treasury)

-fad,

I can certainly understand that each account/transaction will have its own pertinent details. I can also understand this takes time to address. Time = money. But I also assume that the $5.00/month I pay for this service is the cost of doing this type of business.

What I don't understand is this. If they make my payment 4 days after my request why do they need to remove my money immediately. Why can't they wait 4 days and then remove the money on the day of the transaction? If it's to insure the money is there it's a poor excuse. When somene sends a check to make payment, if the cash isn't there it get's bounced or the bank back charges a fee for overdraft. They should do the same for this transaction.

Please enlighten me, as I said I'm not a banker but I feel I have valid points here.

Dear Former "Front Line" Bank Employee Smakbat- glad to hear you've left the business if its not suited to you

fyi- I have worked (and am currently employed) by a Bank and have been for the last 10 years (to present) --->....this may satisfy your qualification for: "...perhaps actually work on the front line without your siren before you make such blanket judgements"??? (sorry to bust your bubble(s);) :D

,,,and in life Smakbat- - naturally there's a lot that gets past everyone! Welcome to the club...:eek:

Placo- don't assume anything- "know" exactly what you get for the $5/mo and exactly happens to the wire in the time periods in question....

Follow the amateur voice and you'll stay frustrated and in the dark <or> follow a disciplined strategy and become enlightened- - to each their own.

There appears a clear lack of real substance from many responses to your inquiry,,,,you can sort them out for yourself- - again to each their own. Opinions are just that...but if you want to "know" :

Banking is a business just like any business (goods or services exchanged for a price). Its the American Way!

If you are doing business with a Bank, saving and loan, credit union, brokerage, cash and save, etc.- - its makes good sense to know your service & benefits, the costs of those benefits, appropriate business practices, etc.

After the fact finding mission determining whether your expectations and the business practices are reasonable is a piece of cake.

Brain- you really think this has something to do with "ATMs"???:rolleyes:

-fad:D

I've used online banking for over a year now and would not go back to writing checks. My bank does not charge a fee for this service and I have saved a bunch of $$ on stamps.

Sorry no pre-judging from my end! (merely keen observations)

If you read my suggestions closely- it patronizes none of the parties in the transaction (consumer, bank, receiving party)- - after all- there's too much "unknown" from the peanut gallery seating to make any judgements nor render an opinon on the inquiry

RE: approach
makes good sense to generally approach matters (even car-type matters) gathering as many facts and circumstances as possible (prior to) lending a judgement

-fad

-fad being in the banking industry can you point me in the right direction? It's this "3 - 4 Days" or should I say "Grey Area" that I need to question. Is the bank really using my money to pad their wallets/pocketbooks or is this $$$$ in limbo during this period.

All I need is some direction, I tried some Google searches but without the "right search words" I think it's futile.:confused:

Depending on what I find I can make a reasonable decision, but at this point I'm totally in the dark........anyone else care to enlighten me?

I don't use bill paying through my bank because there's a charge for the service. Like others have suggested, I pay many of my bills online through the website of the companys I owe money.

My car payment, health insurance, life insurance, retirement savings, auto insurance, health club fees, are ALL automatically taken out of my account. I don't like this, but the another scam companies use is charging MORE for your policies/other if you don't let them take the funds out of your account automatically. They call this a "service" fee if YOU send an actual check.

But the convenience is nice. I seldom write a check for anything, except my Sunday Offering at chruch! :)

About online banking
 

I have been using online banking with a church credit union for the past five years and have never had a complaint.

I would say that in order of desireability, financial institutions would be

(1) Credit unions
(2) Money market funds
(3) Mutual Savings & loans
(4) small banks
(5) large chain "full service banks".

The large chains are so large that they really don't care about the customer, I have found.

I just felt I had to chime in, I work in a bank and get complaints such as those daily...

First, just want to demystify something : No bank in the world invests money they use for transfers...it is forbidden and much too dangerous...

Usually, the delay between the debit of the account and the credit on the other side is a security for the bank...See when you transmit your order online, it goes to your bank's payment center, where it is checked to see wheter any important information is missing, and if there is sufficient money in your account etc etc...Then they proceed to debit your account and send it to the general account of the other bank. That bank's traffic payment center then has to check wheter all the information is correct, I.E. correct customer name, correct account number...then they credit the beneficiary's account...All that takes time, especially when a manual intervention is required (like small corrections of obvious mistakes, for instance a 3 instead of an 8 in an account number)

In Switzerland, all payments inland must clear within two days, but most are executed on the same day. I'm sure there is a law in the US stating how long a payment should take to clear...

I'm guessing, in your case, something probably took a bit longer than usual, but it can simply be the other bank's payment center being buried in work, it happens sometimes...