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#89542 - 06/18/03 08:44 PM
Checks on Savings account
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Member
Joined: Mar 2003
Posts: 96
Jackson, Michigan
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We have a customer that is writing checks off his savings account. The customer has other accounts with us and has had this savings account for many years. For some reason checks have just started coming in. So far two have hit our unposted. Is there a law or reg governing this? Is writing a check different than those telephone checks that come in and post to savings accounts?
At first we thought they were printed with the wrong account, but the checks were for large amounts, and he didn't have enough to pay them out of his checking.
Here in the bookkeeping department we are of the opinion that we should pay the two checks, but warn the customer that anymore checks will be returned.
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#89544 - 06/18/03 09:59 PM
Re: Checks on Savings account
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Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
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IMO Don't pay the checks it just reassures the customer you can and he will do it again, if you reject it he will yell you did it before.
A Savings account is a "Time Deposit Account" with specific requirements to withdraw funds It is not a "Demand Deposit Account" Look to your signature card agrement regarding withdrawals.
Remember you are paying interest on the savings account.
Don't let your customer decide the rules. Call him and tell him this is an invalid process and how to transfer money to his checking account from savings.
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#89547 - 06/19/03 12:55 AM
Re: Checks on Savings account
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Power Poster
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
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I'd give the client a call and discuss the issue of the checks. It could be a pure error on their account, not meant to dictate your actions, but just a misunderstanding on the use of the account. If the relationship is important to you, this call would help you take the next step forward. You could then chose not to pay the checks if the client was beligerent and demanding, or chose to allow these two items to clear....heck you could even turn them into cashiers checks for the client, again, if the relationship leads you in this direction. You might find a horrified and appologetic client who just made a big mistake...and who wants to clean up the issue as much as you do!
If by regulation you are not required to return them, client contact really is pretty essential at this point so as to not damage a relationship.
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CRA Rating is in...Oh who cares...I'm home with the baby.
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#89548 - 06/19/03 04:00 PM
Re: Checks on Savings account
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Joined: Oct 2000
Posts: 27,754
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I have to say I am with Ipso on this if it is a valued relationship. A key element is that you may soon have Reg. D limits looking at you and you may be forced to close that account and change it to another type of deposit, under different rates and fees.
If this is not an acceptable form of withdrawal, tell the customer you value their accounts but this imposes new requirements on you that cannot be handled in this manner. The account isn't designed for it. Do they want a NOW.
The customer needs to be aware of this whether you pay or return items.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#89549 - 06/19/03 04:04 PM
Re: Checks on Savings account
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Joined: Jul 2001
Posts: 83,396
Galveston, TX
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I'm still confused how they acquired the checks for this account to begin with??? If the bank mailed them in error, I would definitely take the more lenient approach.
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#89550 - 06/19/03 04:13 PM
Re: Checks on Savings account
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Joined: Dec 2002
Posts: 40,766
Turnpike Exit 10
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Randy- A lot of people order checks through the ad inserts of their Sunday paper or via the internet. There goes quality control. 
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Get your facts first, then you can distort them as you please. - Mark Twain
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#89552 - 06/19/03 06:00 PM
Re: Checks on Savings account
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Joined: Oct 2000
Posts: 27,754
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We monitor MMDAs on an ex post basis and have to review all statements with excessive activity to determine was it third party or not, and thus how do they count. Opening that up to all savings would be a nightmare.
If the customer bought a program and made their own checks and brought them to the teller line, there is no difference than if they filled out one of the W/D slips. Unless the quality of the paper is such that it jams the proof machines. I've seen this. In fact we disclose a fee for these instance. We've never charged it to my knowledge. But would if we saw a real problem with a particular customer's items. When proof slows by 15 or 30 minutes to clear a jam and special handle damaged items, we have costs.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#89553 - 06/19/03 07:13 PM
Re: Checks on Savings account
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Platinum Poster
Joined: Jan 2003
Posts: 580
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I agree that it would be a nightmare to handle savings accounts the same as MM accounts, but it's an internal issue - not regulatory - any bank is free to provide the "checks on savings service." It is just a little ironic that a customer came up with the check scenario and all we really have to counter with is that we just don't want to do it that way - it's way too much trouble. In this case, the customer may be ahead of the curve.
As the German philosopher Arthur Schopenhauer stated — all truth goes through three steps:
— First, it is ridiculed.
— Second, it is violently opposed.
— Finally, it is accepted as self-evident.
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#89555 - 06/19/03 08:06 PM
Re: Checks on Savings account
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Platinum Poster
Joined: Jan 2003
Posts: 580
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Quote:
Quote:
This scenario actually brings up an interesting point - if the "checks" had been presented in the lobby by the payees would the bank honor the checks? If not, what would be the reason for dishonoring the checks? If this bank were to dishonor the checks and the payees presented them in the lobby of the bank would the bank honor the checks?
No the reason is a savings accout is a "Time Deposit Account" and is not subject to payment on demand.
In some areas the legal verbiage on a savings account may give the bank the right to deny withdrawal request up to 30 days. Check the term of your savings account agreement.
Not correct, savings account volume (on the FR2900 Report) is included in line C1, along with and including MMDA's. Time Deposits Accounts are all listed under a separate line (D1)
The term savings account (deposit) applies to passbook savings, statement savings or a money market deposit account. The maximum transaction limit applies to all these accounts. Under FR2900, Page 44 (Report Item C.1 - Total Savings Accounts) you will find the notation (under transfers to be included in the transaction maximum) "Checks, Drafts, ACH, Debit Card, Preauthorized payments and transfers initiated by telephone, fax, and on-line banking."
So, the point is savings account balances are on equal footing with MMDA account balances in that they are not subject to payment on demand, but only if you invoke the seven days written notice clause of the standard contract covering these accounts. Therefore, they are not like time deposit account, they are separated out into a special category with it's own structure relating to withdrawal activity - including the possibility of withdrawal by check.
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#89556 - 06/19/03 09:04 PM
Re: Checks on Savings account
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Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
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Again Check the saving account agreement the customer signs. Thats what will indicate the terms of withdrawal.
That agreement may differ from instructions on where items are placed on the report.
As for the "possibility" of withdrawal by check we agree to disagree. Secondly, its a sure fire stress builder to read into something more than what was intended.
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#89557 - 06/19/03 09:19 PM
Re: Checks on Savings account
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Platinum Poster
Joined: Jan 2003
Posts: 580
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Quote:
Secondly, its a sure fire stress builder to read into something more than what was intended.
Interesting advice, but it all depends on the whether or not the readers mind is open or closed. One person's stress is another person's discovery mode. As the saying goes:"If we are all thinking alike, somebody isn't thinking" (Patton).
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#89558 - 06/20/03 05:54 AM
Re: Checks on Savings account
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Power Poster
Joined: Jun 2001
Posts: 8,272
Where the heart is
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Well, there's always the long cold icy stare when talking to the customer about why he/she took an account that is designed for one thing (savings) and turned it into something else (checking which is designed for spending money.) Loud heavy sighs are also handy, and there's always the potential of simply transfering the account from a savings to a checking if this is what the customer wants to continue doing (remembering to send out the Reg DD disclosures!) BTW - I don't know about others, but we have excessive withdrawal fees for Savings Accounts when they reach a certain number per quarter. That can usually convince someone to leave the checks with the CHECKING account. 
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Regulations are a poor substitute for ethics.
Just sayin'
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