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#120573 - 10/06/03 09:29 PM Savings Accounts - treated as a checking account
Anonymous
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We have several customers who only have savings accounts with us and treat it like a checking account (i.e., they do not qualify for a checking account due to being reported on Chexsystems). However, once their deposit is made, they continually make withdrawals, use the ATM, have ACH activity hit the account and when it is time to collect our service charges and ATM usage fees over 3, the account is at a zero balance or there is not enough money to satisfy all fees. We do not put the account in a negative status, and our system will only make 3 attempts to collect the fees. Needless to say our customers will make another deposit and continue the same practice. I think they have figured out the system. Does anyone have a solution to this problem of lost fee income?

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General Discussion
#120574 - 10/06/03 10:28 PM Re: Savings Accounts - treated as a checking account
RBanker Offline
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RBanker
Joined: Jul 2003
Posts: 2,675
Austin Texas
If they are continually making excessive transactions, you should close the account and either forward the remaining funds to the customer, or transfer into a checking account, based on Reg D ( If more than six transfers (or more than three third party transfers by check, etc.) are permitted or authorized per month or statement cycle, the depository institution may not classify the account as a savings deposit. If the depositor, during the period, makes more than six transfers or withdrawals (or more than three third party transfers by check, etc.), the depository institution may, depending upon the facts and circumstances, be required by Regulation D (Footnote 5 at Sec. 204.2(d)(2)) to reclassify or close the account. )
- make sure you have covered yourself in your disclosures, though
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#120575 - 10/06/03 10:28 PM Re: Savings Accounts - treated as a checking account
Anonymous
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I don't know if this will help, but our system automatically puts a hold on the account for the monthly service charge as soon as the customer goes below the minimum balance. So that way we hold there fee until the end of the month and take it out. This confuses some customers because the fee won't show up in there available funds, but we know we are going to get our fee. We have Fiserv, hopefully your system can do something similar.

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#120576 - 10/07/03 01:57 PM Re: Savings Accounts - treated as a checking account
Anonymous
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We use Fiserv too. However, evidently our specs are not set to do what yours is doing (easy fix though). However, I was wondering if the customer complained because they saw less money in their account (i.e. at an ATM) we would have to make all the funds available.

Do you disclose to the customer that the fee will be held from the available funds?

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#120577 - 10/07/03 02:02 PM Re: Savings Accounts - treated as a checking account
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
Quote:

We have several customers who only have savings accounts with us and treat it like a checking account (i.e., they do not qualify for a checking account due to being reported on Chexsystems).




Why spend any time on several customers that (1) may not be profitable (considering the efforts you are going through to control them), (2) have most likely violated their depositor agreements for the savings accounts, and (3) you don't trust enough to give a checking account.

Close the accounts and move on!
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#120578 - 10/07/03 04:20 PM Re: Savings Accounts - treated as a checking account
Anonymous
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The way our Truth in Savings disclosure states it, we charge $3.00 whenever the balance falls below $100 anytime during the month. So usually when I have a customer ask that there balance should be $3.00 more, I just tell them since they are below the $100 the system is holding their fee. The customers know they are going to get charged from the day of opening, so they don't really complain about it.

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#120579 - 10/07/03 05:04 PM Re: Savings Accounts - treated as a checking account
Anonymous
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Thank you for the information. Our disclosure says the same thing. It is probably worth changing the specs to capture the fee.

For the other response made above, according to deposit operations people, it is an average of $600.00 per month in fee income that we are not getting. Some months could be more profitable than others. Thanks!

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#120580 - 10/07/03 07:12 PM Re: Savings Accounts - treated as a checking account
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
But you still have the problem of these account violating the Reg D transaction limitations. What do you plan to do about those?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#120581 - 10/07/03 07:35 PM Re: Savings Accounts - treated as a checking account
Anonymous
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I don't think I have a choice but to see who is violating the reg continuously. Those that are, we will have to notify them appropriately. If they continue on month after month we will have to close the account. I do think that there is some value in capturing the fees when the min balance is not obtained. At least we may be somewhat guaranteed the service charge.

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#120582 - 10/07/03 07:40 PM Re: Savings Accounts - treated as a checking account
Deena Offline
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Deena
Joined: Nov 2000
Posts: 2,701
PA
It sounds as if this has already been going on for awhile. If that's the case, I wouldn't wait to see if they "continue on month after month" (the standard is generally three times in a rolling 12-month period). You are opening yourself (your bank) up to regulatory criticism and potential fines (not to mention the cost to reclassify and re-reserve) that will more than likely far exceed any fees you may collect from these accounts.
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Opinions expressed are mine and not necessarily those of my employer.

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#120583 - 10/07/03 08:05 PM Re: Savings Accounts - treated as a checking account
WildTurkey Offline
Platinum Poster
WildTurkey
Joined: Jan 2003
Posts: 921
Down South, USA
Is it just me? You deny somebody a checking account, but you let them open a "savings" account with ATM access and are then surprised that they use it like a checking account?

Some parts of the US banking system may always be a mystery to me!
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This is my opinion; it is not legal advice, nor the view of my employer, and it may change tomorrow.

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#120584 - 10/07/03 08:25 PM Re: Savings Accounts - treated as a checking account
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
I concur with WT. What makes you think that a customer has any less chance of fleecing you by using a savings account over a check account? Makes no sense to me either, but I see it time after time.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#120585 - 10/07/03 10:56 PM Re: Savings Accounts - treated as a checking account
Anonymous
Unregistered

I agree with both of you. It makes sense to me if one is denied a checking account, why would we open a savings account. However, we went through a merger with a Savings and Loan (we were and still are a National Bank), and these accounts were from the S&L. Unfortunately, that was not and is not our practice as a National Bank. It is tough to re-train people....from what they "were use to doing and what they got away with - both from a customer standpoint and bank."

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