Day 1 – Metavante issues a check for bill payment

Day 4 – Metavante discovers the account does not have sufficient funds – but it’s too late. Their check is already in the mail.

Day 4 – The credit union learns there were insufficient funds and assess a fee against the members account

Day 6 – Metavante tries to repost the transaction and discovers the account does not have sufficient funds and stops payment on their check.

Day 6 – The credit union learns there were insufficient funds and assess a second fee against the members account

Day 19 – The person receiving the check learns the check is bad and that payment had been stopped by Metavante. The recipient is charged a fee from his financial institution for processing the bad check.

The end result –

1. Metavante issued a bad check when funds were not available.

2. The member was assessed insufficient fees twice.

3. The credit union collected $50 for the insufficient fees generated by Metavante.

4. The recipient of the check was charged $10 for processing an invalid check.

5. The financial institution who accepted the check for deposit now refuses to accept checks from the credit union or Metavante.

6. The member using the bill paying service is now looking for another service and the credit union bets a black eye.

I prefer using bill pay as a safety feature, “pushing” the money, rather than allowing companies to “pull” the money from me. We’ve all read enough horror stories about zombie auto-debits that won’t stop.

BoA debits your account when the check is sent. I had one experience where the check was “lost in the mail” on it’s way to my student loan holder (I now use the student loan website directly than BoA’s automatic bill pay), and a more costly experience when I stupidly paid my mortgage twice via BoA’s bill pay. From the latter, I had 4 overdrafts leading to $140 in fees. Three of those were checks sent via online bill pay – one to my mother, one to the dog walker and one to my housecleaner. The other was a direct debit transaction. NONE of the three checks cleared the bank, because I called everyone and they all still had or had not even received the checks, AND the mortgage payment wasn’t credited for 4 days after the late fees were incurred. I was pretty confident that BoA would refund at least some of the fees when I called and pointed all of this out, but all they kept saying was “this was not a bank error and the account was debited in accordance with our policies.”

As a direct result, I now have an ING account, but its too early for me to comment on that

A couple months back, I sent my mom a check through BoA’s online bill pay. It was set to be delivered to her on a Thursday (thought it didn’t arrive until a week later…a whole other matter) and the funds left my account that same day. However, the check wasn’t actually cashed by mom until two weeks later (due, in large part, to her not receiving the check for another week). So basically, BoA had two full weeks of earned interest on my money. I wasn’t too happy about that.

I just switched from NetBank (risk model) to ING Orange and not 100% sure which model ING is using. I paid my mortgage a couple weeks ago and thought ING uses the good funds model. However the lender posted my payment on the same day I scheduled the payment.

Sorry, couldn’t help myself. Too bad I couldn’t use the red background too. Personally, I agree it’s the principal of the matter but as Devil’s Advocate I would like to say at least we are still saving money by using INGs service.

Let’s assume the average check someone writes is for rent, $500 to keep the math simple. The interest rate is 4% (compounding ignored for this case) and finally that the check is not cashed for 5 days (three in the mail, 2 for cashing.)

(($500*.04)/365)*5 = $0.27397 or 27.5 cents. I have to say, that seems like a significant savings over my cost to buy stamps, a envelope and checks each year. I won’t begrudge ING the few cents pilfered on the deal. Please, someone else post the required rebuttal.