The story I heard was about an average guy, like you and me, who paid $35 for a
Latte. Actually the customer used a debit card to buy a $5 latte. Later he learned that the bank authorized it even though the customer had less than $5 in the account. The bank charged $30 for the transaction that overdrew the account to a negative balance.
In a case like that the bank could have denied the transaction at the checkout. However, the coffee is made, the customer could smell their favorite coffee aroma, and have no way to pay for it. Consumers don’t like that either.
NPR does a good job of reporting fairly, but, I thought I sensed empathy for the consumer in this report. It is difficult to report on anything between an individual and a major corporation without siding with the individual. It’s true even when it’s a local company and not a national giant. We all have a feeling for the “little guy.”
What’s a bank or credit union to do? The solution is not the intuition’s to figure out, actually. It’s really the customer’s opportunity to take charge.
Financial institutions have had a rough couple of years. But it’s not up to any particular customer or group of them to help the institution make money. Of course, any company that provides a service needs to be paid for services rendered; consumers know that. However, reports like NPR’s, with only the slightest hint in the reporter’s tone of voice, suggests that the customer in the Starbuck’s predicament was mistreated.
The fact is, the customer in the example saved face. I have felt foolish when a card was denied; haven’t you? We know how that feels. It doesn’t matter why it’s denied. Some customers will make up something just to deflect the blame onto someone or something else.
One simple solution is so simple most consumers don’t do it. Keep a record. It’s called a check register. Your check printer makes the booklets available free of charge. Even if you don’t use checks and look online every day, or like a growing number of people nowadays they receive a daily text message with the balance, your bank’s balance cannot account for the checks you wrote that have not yet cleared the system. Life’s too complex to think you can remember all the outstanding checks or offline ATM withdrawals you made that are no posted yet. Yes, that’s right, not all ATMs are able to verify your balance at that moment and may give you the money anyway, for your convenience.
It only takes a few minutes to keep a running balance of your checking account. What would you like to get paid for that small bookkeeping chore? Think of it this way, for every overdraft fee you prevent, that’s your pay for keeping track; it could be worth $60 or $70/per hour. And your latte’s only cost the regular price. What about the cost difference of a latte over regular coffee; that’s a topic for another time.
Dan Clark
