The Customer Service Survey
$550 in bank fees for a free upgrade
Mon - January 14, 2008 07:40 PM in
I'm traveling today (to Boston, where I got slowed down a bit by a little nor'easter), so here's a quick horror story...
One of the authors of the Breaking Windows blog bought a Blu-Ray DVD player from Best Buy on January 2nd. Four days later, Best Buy started offering the same player bundled with four free movies.
No problem, Best Buy provides a reasonable return policy. He returned the player for a refund, then turned around and bought the same player with the free movies for the same price. Easy, right?
Not so fast. A few days later, he went to the bank to deposit his paycheck, only to find his account overdrawn by $362. Huh?
This hapless consumer made the mistake of using a debit card (rather than a credit card) for the purchase-return-repurchase transaction--and with this bank, the purchases were withdrawn from his account immediately, but the credit for the return was held up two days.
During those critical two days, the account became overdrawn and started incurring an overdraft fee for each and every purchase. Apparently this debit card gets quite a bit of use, and those fees quickly amounted to hundreds of dollars. The bank credited back $243 as a "courtesy," but left something like $550 in fees on the account--probably far more than the Blu-Ray player cost in the first place.
Of course, had the credit for the return been applied just as fast as the original purchase, the account never would have overdrawn and none of these fees would have been applied.
There's a lesson in here, of course. Banks have been pushing "check cards" like crazy the past few years, and it's not because they want to support the manufacturers of plastic resin. Someone deep in the bowels of the bank calculated that they can make more money if customers get in the habit of using debit cards, and I'm guessing most of that extra profit comes in the form of "gotcha" fees on consumers who aren't paying quite enough attention.
Posted by Peter Leppik
No problem, Best Buy provides a reasonable return policy. He returned the player for a refund, then turned around and bought the same player with the free movies for the same price. Easy, right?
Not so fast. A few days later, he went to the bank to deposit his paycheck, only to find his account overdrawn by $362. Huh?
This hapless consumer made the mistake of using a debit card (rather than a credit card) for the purchase-return-repurchase transaction--and with this bank, the purchases were withdrawn from his account immediately, but the credit for the return was held up two days.
During those critical two days, the account became overdrawn and started incurring an overdraft fee for each and every purchase. Apparently this debit card gets quite a bit of use, and those fees quickly amounted to hundreds of dollars. The bank credited back $243 as a "courtesy," but left something like $550 in fees on the account--probably far more than the Blu-Ray player cost in the first place.
Of course, had the credit for the return been applied just as fast as the original purchase, the account never would have overdrawn and none of these fees would have been applied.
There's a lesson in here, of course. Banks have been pushing "check cards" like crazy the past few years, and it's not because they want to support the manufacturers of plastic resin. Someone deep in the bowels of the bank calculated that they can make more money if customers get in the habit of using debit cards, and I'm guessing most of that extra profit comes in the form of "gotcha" fees on consumers who aren't paying quite enough attention.
Posted by Peter Leppik
Posted at 07:40 PM | | | | |