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Watch Out For This BAD Practice By Alliant Credit Union

Wednesday, June 30, 2010 - 7:26 PMAlliant Credit Union - Details
I have just learned about a very bad practice by Alliant Credit Union when using their online account access to set up a future transfer between your Alliant accounts. A CSR told me this on the phone, and I have just confirmed it via sending a message about it online.

Alliant provides for setting up in advance a transfer between accounts on a future date. I was targeting that to set up a transfer for such things as some automatic debits I have set up with my account, using my interest-free checking account, in which I otherwise keep a zero balance. When I get my bills, I go online to Alliant and set up the transfer of funds to cover the incoming bills, which coincidentally are all due right around the same time. I know when the first bill will be taken by the biller so use that as my transfer date.

I thought, and think I had every reason to presume, that setting up a transfer for a particular day would mean those funds would be available in the account that day to cover any transactions. However, Alliant chooses not to make that transfer between accounts until late that night, but it processes all the ACH debits as they come in throughout the day and will bounce them all day long for lack of funds, even though I gave them advance instructions to put those funds in the account on that day.

I find this practice very disturbing. And I have told Alliant so. I also have told them that if they insist on continuing such a practice, they should at least post a big warning about that on the Web page when you go to set up the transfer in advance. But they seem unfazed by my complaint. (Maybe if others also complain about it, Alliant will fix it.)

I note, if I wait until the day I want the funds in the account, and go online and do it immediately, it posts to my account immediately and is available for any transactions, not late that night. (So I certainly expected the same for the advance setup, in fact figured it would happen early in the morning before the credit union even opened.) But the danger of waiting to do it on the particular day is that I might forget on any particular day to make the transaction, something the advance setup avoided if it worked -- or I might do it when I wake up on the West Coast but find the bill came in via the ACH overnight (which is when they tend to come in from these places) and has already been bounced! 

So, be careful and be forewarned. Such a bad practice, and I think a bad attitude about it, by a credit union that otherwise has been one of the better ones. But I guess it is not as good as I had thought.
6
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
1. Wednesday, June 30, 2010 - 7:48 PM
I have a quick workaround answer for you.  Why not set up an imprest balance to cover like an average week's expenses that you pay.  That way you have some safety balance (in the account but not reflected on your check register) in your checking account.  I might suggest at a minimum a precautionary balance of $500 or $1,000.  That way you can stop the worry about last minute transfers posting at the end of day after the ACH debits are posted.  The interest lost on the $1,000 for a whole year at 2%(est.) is  only $20.

Just something I do and don't worry about bank transaction posting sequence.

OC Steve
1
ocsteveocsteve14 posts since
Jan 17, 2010
Rep Points: 58
2. Wednesday, June 30, 2010 - 9:13 PM
It may be a bug in their system, but I am sure that it is not intentional.  BTW, CSRs usually have no clue how their system performs anyhow. 

I used to do such an exact maneuver with BofA, but I do have a safety net (an overdraft reserve account with a $3,000 limit). 

As Steve stated, every bank may have their style and shortcomings, one may need to work around it if the bank is otherwise a good one.

Establish a reserve account with them, if possible.  Or else, just keep some fund in it as Steve suggested.  Having peace of mind may be worth more than the net interest you are gaining:-)

Just some friendly feedback.    
1
51hh51hh1,462 posts since
Jan 16, 2010
Rep Points: 6,352
3. Thursday, July 1, 2010 - 10:49 AM
Actually, it is INTENTIONAL. They have confirmed that to me. 

I have heard of a few other banks doing this -- because they rack up the bounced check fees. 

Seems to me, while I might figure out a way to operate anyway, if I have told them to put the money in there on a certain day, they should not be bouncing things all day long while CHOOSING not to put that money in! That just strikes me as dishonest. Even if you want on the basis of first in, first out -- my advance deposit was first in, but they choose to process all the later-arriving debits first!

Again, on a work-around, that should not be necessary. As for the overdraft coverage, I consider that to be a MAJOR security risk. If someone sends in fake debits (check or otherwise) to my account, they could clear me out if I have that. Without that, if someone sends in fake debits, there is nothing in the account to get and no other account can be used to pay that fake debit. I have always considered overdraft protection to be highly dangerous, even irresponsible. So, I must be diligent -- and I believe I am being so when using the advance transfer option -- but Alliant is defeating the entire purpose of that advance transfer option by the approach they are taking, and NOT EVEN WARNING US about it!
-3
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
4. Thursday, July 1, 2010 - 1:43 PM
By "intentional", I meant that they are out there to get you personally.

By risk of overdraft reserve, it is included in the genral security protection measure one should have for all one's accounts (e.g., RCAs).  Note that this is the reserve LOC (line of credit) account, not the (debit) overdraft protection one has to opt in these days.  It functions just like a credit card line or home equity line.  Thus it bears the same level of risk as your linked savings account, if not less (since it is a credit line vs. savings fund).  Anyhow, It is puzzling to me how poeple would not consider zero-balance for checking as a risk but would consider the overdraft Line-of-credit reserve as a secuirty risk.  But I guess it is just personal taste. 

Just to be fair: If I were a banker, I would not be very happy with your usage as well.  It is not used for its intended purpose.  And the bank has to maintain an account that has a zero-balance most of the time. 

There are bank practices that simply are taking the customers for a ride, but I have to say that this minor one, in my humble opinion, does not belong to that category.   
0
51hh51hh1,462 posts since
Jan 16, 2010
Rep Points: 6,352
5. Thursday, July 1, 2010 - 4:00 PM
Well, clearly I disagree. As for not being used for the intended purpoose -- nonsense. For one thing, the bank has just as much money on deposit, so how does it make any difference to them which account it is in? Secondly, I even told them how I was planning to use it before I opened it!

I do know that some years hack, the state of California prosecuted Well Fargo for this very practice! And won. So, I'm not the only one who thinks it a serious issue.

Their practice not only leads to possible bounced ACH debits that should have been covered, but it also denies me any other use of that money for that day. 
-3
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
6. Thursday, July 1, 2010 - 5:18 PM
their practice is counter intuitive.

but say again why you don't simply schedule your deposit for the day before?
3
cmcm2 posts since
Jul 1, 2010
Rep Points: 14
7. Thursday, July 1, 2010 - 5:55 PM
I agree it is counter intuitive -- but I also think it is worse, it is devious and designed to collect fees for bounced ACH debits.

Thanks for asking, but my reasons are not important -- I'm not asking anyone here to come up with some work around. If I instruct in advance to put cash into my account on a certain day, transactions coming in that day should not be bounced while they hold off on putting the money into the account that they know they are supposed to put in there, and they know when they are bouncing the ACH debits that the money is already set to be in there but they bounce them anyway.

And they are not alerting people to that practice when people set up the advance transfers -- setting them up for bounced debits.
0
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
8. Thursday, July 1, 2010 - 6:17 PM
I agree it is counter intuitive -- but I also think it is worse, it is devious and designed to collect fees for bounced ACH debits.

Thanks for asking, but my reasons are not important -- I'm not asking anyone here to come up with some work around. If I instruct in advance to put cash into my account on a certain day, transactions coming in that day should not be bounced while they hold off on putting the money into the account that they know they are supposed to put in there, and they know when they are bouncing the ACH debits that the money is already set to be in there but they bounce them anyway.

And they are not alerting people to that practice when people set up the advance transfers -- setting them up for bounced debits.

 

OK, let me try once more to understand.  Did you pay bills out of fund that is available or did you pay bills out of fund you expected to be available (which is a no no in my book)?  if the fund is delayed and not available, wait till it is to schedule your payment.  You cannot schedule payment based on your expected fund availability!  Nothing works so precisely and you really really should not depend on it. 

If Alliant changes the fund available at one time to "not available" at another time, then I agree that you have a case.  But I think your complaint is just Alliant took some time for your fund transfer, wihch is longer than your expectation.  To that, if I were Alliant CSR, I would say "Sorry, take it or leave it.":-)  Seriously, I do not think that you have a case.

People here, including myself, are just trying to help you.  If you simply want to gather support for protest or to demand us to agree with your complaint, you should say so in the first place so that we do not spend our time on such a matter in which your mind has already been made up.

Peace:-)

0
51hh51hh1,462 posts since
Jan 16, 2010
Rep Points: 6,352
9. Friday, July 2, 2010 - 1:04 PM
All funds free and fully available -- of course. Alliant intentionally CHOOSES not to put them in the account until late at night, after it first bounces anything that comes in over the course of that day that those funds were supposed to cover.

That is, they were first instructed to put money in the account. It is fully available to be done. They don't do it and wait - seeing if something might come in later that they can bounce. Something does come in over the course of the day -- that is, a LATER instruction (ACH) -- and they bounce it. Finally, late at night, after everything that came in is bounced, they put the money in the account, finally honoring the first instruction they had.

I'm not looking for help -- I'm warning people. The only help would be for others to complain to Alliant about that practice and urge them to change it.
-3
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
10. Sunday, July 4, 2010 - 11:16 AM
There is another way to address this issue, I believe.  It involves a good suggestion to make to Alliant CU.

The suggestion would be to enhance Alliant's account to account future time  fuds transfer function to include a setting for time of day in addition to future date. 

From Alliant's perspective, it would involve enhancing the computer program that implements this function but that is only a small matter of programming.  I am sure Alliant would appreciate the suggestion from me1004 if they got it from him/her.  Usually computer programs supporting banking web sites are revamped every year, and me1004's request could very well make it into the next iteration.

Hope that me1004 makes this request to Alliant because I can see other uses for this enhanced function.

The big issue I believe that matters to many of us and that needs addressed is the loss of interest on our funds during the time of ACH transfer.  Information travels instantaneously, there is simply no excuse these days for holding on to our money for a day, sometimes more.  Some institution is raking in the time value on our money sitting on it during the time they tell us it is being moved, while we lose it.  Does it make sense to organize and put pressure on financial institutions and the Fed so ACH transfers do not cause loss of interest on our money to us, while keeping ACH free of charge.

 
-1
sanjosedadof1sanjosedadof11 posts since
Jul 4, 2010
Rep Points: -1
11. Thursday, July 8, 2010 - 5:41 PM
Just FYI, I think it would be helpful if Alliant heard from a lot more than simply me. Still, I have been going round and round with them on this since I first posted. We have had several e-mails back and forth, and then they even called me on the phone yesterday. 

I countered pretty much everything they said in their e-mails, some of it outright wrong about their own policies. By yesterday's phone call, they seem to understand what I'm saying and that I've pretty much put down all of their explanations or arguments. They sounded like they have no idea why they aren't doing the transfer right after midnight (early a.m.) of the day it is to be done. (I also suspect my comment to them that California some years back prosecuted Wells Fargo for this very practice -- and won -- got their attention, as it is at that point that they chose to pick up the phone.)

They have bucked it up the ladder to the people who would address these things and consider making changes, supposedly with the suggestion that they change the time set for doing these transfers scheduled in advance from later at night of that day to first thing in the morning, before they do the overnight ACH processing. But of course, that doesn't mean anything will be changed, just that it is being put before the pertinent people.

BTW, related to sanjosedadof1's comments, Alliant tells me they have no choice by federal rule but to process all incoming ACH items before they open each day. As such, it is unconscionable that some banks do that processing first thing, but do not post to your accounts as well on that day!
1
me1004me1004346 posts since
Jan 16, 2010
Rep Points: 2,368
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