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Just one small reason why we need a strong CFPB

a rant

Please excuse the somewhat off-topic post, but as I sit here at 11:20 a.m. exhausted from doing battle with USAA Federal Savings Bank, I can’t get my mind back to work until I get this off my chest.

Yesterday I deposited a $250 check from my local state college (Georgia Institute of Technology), drawn on a small community bank (Bank of America), into my USAA checking account in the only way possible for a bank with no retail outlets: at the local UPS Store, where USAA offers “Easy Deposit” services.

I then made a couple of payments & purchases, totaling $143.35, thinking the remaining $106.65 would get me through to my monthly check next week. Little did I know, USAA, not trusting that Georgia Tech and B of A would honor that hefty sum, released only the first $100 of the $250, holding the balance for 7 business days (July 30). And yes, the fine print on their website says “Your deposit will be reflected in your account immediately.  Funds may not be available for immediate withdrawal,” but could I reasonably expect that this small sum from a state organization would be subject to a hold?

To answer that question, I consulted the Consumer Financial Protection Bureau (CFPB), the agency set up as part of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), and whose director, Richard Cordray, was finally approved by the U.S. Senate last week after nearly 19 months of Republican-threatened filibusters. Here’s what they had to say on the subject:

Generally, if you deposit a check for $200 or less in person to a bank employee, you can access the full amount the next business day. If you deposit more than $200, you can access $200 the next business day, and the rest of the money the second business day…

It may take longer for you to access your deposit for a few reasons:

  • If you have a new account or if your account has been overdrawn too many times in the past six months;
  • If you make a deposit over $5,000;
  • If you make a deposit at an ATM owned by someone other than your bank or credit union; or
  • If the bank or credit union reasonably believes the deposited check may be uncollectible.


So I called USAA, where I was told that all funds are subject to holds pending collection based on unspecified criteria in their “system.” I asked if all funds in fact were held, to which the supervisor answered “no.” “So on what basis were my funds held?” She was not at liberty to say, as that information is “proprietary.”

“So how can I, as a consumer, know when, how much, or how long my funds will be held before I deposit them in your bank?” She could not answer that question. She did inform me, however, that even after the funds are collected, which in most cases is between 48-72 hours (2-3 business days), the hold remains in effect for the entire 7 business days “in case there is a charge back from the issuing bank.” In other words, USAA can hold your money up to 5 business days after they get paid “just in case.” And this is not spelled out in their disclosure statement.

Frustrated, I hung up. Then I realized that one of the payments I made from this account was an electronic payment on a credit card bill. Since there was no sign that this payment had hit my account, I called USAA back to find out what would happen, and how, if at all, I could prevent further problems. I was told that USAA may pay the bill and charge me a fee, or they may return the payment request unpaid and charge me an even higher fee. He thought the latter was more likely, but again, the “system” would decide.

Realizing I would need to deposit funds to cover this $43.65 “overdraft,” I prepared to head back to the UPS Store to transfer funds from another bank account. I was in the car when I realized… “what if they hold some of all of this new deposit?” So I made a third call to USAA…

I explained the situation to the pleasant customer service representative, and after a long hold I was cut off (my fault). To my surprise, I immediately got a call back from this representative, who told me that they were now releasing the funds in my account, but that the payment was presented overnight, and was returned unpaid, which would prompt a $29 overdraft fee (remember, but for the held funds, I had a positive balance). I could, however, request the fee be waived once it showed on my account (given my experience, I’m not holding my breath).

Next I called my credit card company, who said that they would not be submitting the payment request a second time (something usually done for bank drafts), and that I would be hit with a returned-check fee of $25 dollars which could only be waived upon receipt of a letter on USAA letterhead stating that the problem was a result of USAA’s error (again, not holding my breath).

So, after wasting an entire morning, and incurring fees at this point totaling at least $54, I still don’t know where I stand. Once the dust settles, I see myself wasting another several hours of hypertension-inducing customer service calls to finally resolve this situation. And all because USAA bank chose to cloak its deceptive banking practices in overly-vague “disclosure” language.

Please, Director Cordray, now that you’ve finally begun your long-delayed engagement, make sure the CFPB has some regulatory teeth. In the mean time, please feel free to let USAA know how you feel about their policies. And remember to never expect your funds deposited at USAA to be available before 7 business days.

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