drewkitty

This is the banking industry standard practice for applying debits and credits to an account.

That's where all debts are applied on the same day prior to all credits on that day, in inverse order. (Highest debit first, all the way through lowest debit . . . pausing to hit you with rolling overdraft fees after each transaction . . . then smallest credit up to largest credit.)

Let's do the math.

You have $500 in your account prior to pay day. You start your day with a $5 latte from GenericCoffeeShop. You deposit $600 in a single paycheck, purchase $100 in groceries on debit card, and electronically present a $400 check on the day you are paid. Oh, and you pay your cell phone bill $50 and have dinner out with your other of choice $50.

You would expect $500 + $600 == $1100 minus $605 in transactions = $495

What you actually get is
$500 - $400 = $100 [check]
$100 - $100 = $0 [groceries]
$0 - $50 = ($50) [phone bill]
($50) - ($25 overdraft) = ($75)
($75) - ($50) = ($125) [dinner]
($125) - ($25 rolling overdraft) = ($150)
($150) - ($5) = ($155) [latte]
($155) - ($25 rolling overdraft) = ($180)

NOW the deposit hits

($180) + $600 == $420

Notice the $75 in overdraft fees you're suddenly missing. READ YOUR STATEMENTS, FOLKS.

Now let's imagine that you're living closer to the wire. You have $100 in the bank, deposit your $600 paycheck, and do the same $590 in transactions. You would expect to end up with a balance of $110.

This is gonna hurt. A lot. We are also going to assume an overdraft limit of $500. Your fees will vary but are often higher.

$100 - $400 = ($300) [check]
($300) - $25 overdraft fee = ($325)
($325) - $100 = ($425) [groceries]
($425) - $25 overdraft fee = ($450)
($450) - $50 = ($500) [cell bill]
($500) - $25 overdraft fee = ($525)
($525) attempt to present [dinner] DECLINED
($525) - $5 = ($530) [latte] HONORED
($530) - $25 overdraft fee = ($555)
($555) - $25 over-the-overdraft-limit fee = ($580)

NOW the deposit hits:
($580) + $600 = $20

So what you see is that your dinner bounced for no reason and then when you check your ATM or statement that all your money is gone. Aren't you glad that dinner bounced, despite your date's reaction? Because if it hadn't:

($525) - $50 = ($575) [dinner] HONORED
($575) - $25 overdraft fee = ($600)
($600) - $25 over-the-overdraft-limit fee = ($625)
($625) - $5 = ($630) [latte] HONORED
($630) - $25 overdraft fee = ($655)
($655) - $25 over-the-overdraft-limit fee = ($680)

DEPOSIT ($680) + $600 = ($80)

Tomorrow: ($80) - ($25 rolling overdraft) = ($105)

Hope you check your statement soon, because the rolling overdraft will keep hitting your account daily, even with no activity . . .

If you ever try to stick a bank with a negative balance, they get out the big sledgehammer called ChexSystems, and you find yourself bankless and not by choice.

Use Credit Unions. They will cheerfully explain to you the technique they use to apply credits and debits -- unlike commercial banks who thrive on cheating their customers.