Banking is usually straightforward. Your paycheck shows up in your account via direct deposit, you pay your bills online, and you withdraw your spending money from the ATM. Everything's easy and hassle-free.
Every now and then, though, you run into a rule or regulation that catches you short. While some of these regulations impact your financial life in minor ways, others can be anxiety provoking.
Here are three ways banking regulations can affect your everyday financial transactions:
1. Your Available Funds May Be Different From Your Account Balance
On Thursday morning you go to your credit union's ATM to deposit a $500 check from your aunt. Your balance slip shows an account balance of $1,000; the $500 your aunt gave you, plus another $500 you had in there before you made your deposit. However, when you go to make a $750 payment on Friday, your available balance is just $725. How can that be?
It has to do with Regulation CC, or the Expedited Funds Availability Act, which standardizes how financial institutions process deposits into transactional accounts according to specific time schedules. The regulation has several provisions, all designed to benefit and protect everyone involved in a transaction: the person making the deposit, the person who wrote the check, and the financial institution.
In a nutshell, Regulation CC ensures that funds deposited via cash, wire transfer, or certain types of checks, such as bank checks, U.S. Treasury checks, and checks drawn from the same financial institution, are available to depositors by the next business day. However, other types of checks may have longer hold times, such as a personal check drawn from another financial institution, deposits over $5,525 in one day, or a check being deposited to an account that's less than 30 days old. A financial institution can choose to lessen the length of time on a hold, but when placing a hold, they cannot exceed the hold days allowed by the regulation. (You can read Hanscom FCU's funds availability disclosure here.)
Frustrating? It can be, especially if you expected to have access to those funds immediately. If you need your money immediately, next time you could ask your aunt to transfer the money directly to your account or show her how to transfer money using a P2P service like Venmo, which is designed to make paying family and friends quick and easy.
2. Check Bouncers Get Tracked
If you have a history of bouncing checks or conducting insufficient funds transactions, you may be unable to open a new checking account. That’s because most banks and credit unions track repeat check-bouncing offenders in databases they can check before opening accounts. Keep in mind these databases are not the same as credit bureaus. If your name shows up as a chronic check bouncer, you could be deemed too risky.
So how do these databases get this information? Credit unions and banks report your banking behavior to the companies that manage the databases. The practice is regulated by the Fair Credit Reporting Act and is completely legitimate.
What to do if your check-bouncing is keeping you from opening an account at your credit union of choice? You can start by breaking the bad habit of bouncing checks! Once you've done that, shop around — another institution might be willing to take you on. Finally, contact the company that manages the database (ChexSystems is a common one) and ask them how to go about clearing your name.
3. Privately-owned ATMs Aren't Always Regulated
ATMs are all about convenience, so sometimes it makes the most sense to go to the closest one rather than drive all over in search of one owned and operated by your financial institution. If you choose to use one of these privately-owned ATMs, typically found in places like grocery and convenience stores, bars, restaurants and entertainment venues, be aware that they are not exact replicas of the ones found at credit unions and banks.
What are the differences? First of all, these ATMs dispense cash only — you cannot make a deposit at a privately-owned ATM. This might not be a huge deal, unless you suddenly need to deposit a check while hanging out at an amusement park or pizza parlor.
Secondly, privately-owned ATMs are for-profit entities. The ATM owner is making money off your need for cash, hence the astronomical transaction fees. While recent surveys found that the average bank ATM fee is around $3, private ATMs often charge much more.
And number three and maybe the biggest concern of all...while ATMs at financial institutions are governed by federal financial laws, private ATMs are somewhat of a free-for-all. This means that using a private ATM is exponentially riskier than using the ATM at your credit union or bank. Technically, they are regulated by the state in which they reside, but not all states actually regulate them. Massachusetts is one of the states that does regulate.
There's an easy workaround, though. Did you know as a member of Hanscom FCU, you have access to over 100,000 surcharge-free ATMs, some of which can be found in the places you shop? Search for the closest one here.
Do you have questions about regulations, fees, or anything else that impacts your financial life? We here at Hanscom FCU are happy to help. Contact us and we’ll give you the information you're looking for.
If you’re looking for a checking account that puts your financial needs first, think about opening up an account with us today. We make opening a checking account easy. Visit hfcu.org/checking to open your account online or stop by a branch today.
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