A few weeks ago I wrote a post-dated cheque to cover my rent. When I gave the cheque to my concierge, I asked her to keep it separate from the rest of the rent cheques.
In spite of my efforts, the cheque was deposited days early and went through on Dec. 5 instead of Dec. 7. My bank account was emptied, the cheque bounced and my bank charged me $42.50 for having insufficient funds.
I wasn’t prepared for what happened next. During visits to two Royal Bank of Canada branches, my own and the one nearest to me when I discovered my bank card didn’t work because my bank account was in the negative zone, I pointed out the cheque was deposited too early and should not have cleared. The Royal Bank blamed my landlord’s bank, the Banque Nationale, because their teller didn’t notice the date and put the cheque through anyway. The Royal Bank told me to ask the Banque Nationale to refund the $42.50.
I was told that no one on the Royal Bank end would have verified the date on the cheque, that cheque depositing is done automatically and there are no people involved in the processing once the cheque is deposited. The Royal Bank also refused to advocate for me and said they don’t get involved with bank-to-bank communication.
I demanded my $42.50 back. After an account manager at my branch repeatedly said it was the other bank’s fault, I finally replied that I’d be moving my account to another bank since 24 years as a Royal Bank customer didn’t appear to count for much. She finally credited the $42.50 but said she didn’t have to, the Royal Bank was doing it because I appeared to be a good client and they didn’t want to lose me as a customer. My landlord was supposed to arrange for a refund from the Banque Nationale. I’m still waiting.
I’ve since found out that most of what the account manager told me was bullshit. They had no right to take money out of my account before the date on the cheque.
- Post-dated cheques don’t mean much these days, in practice, that is. I wish this weren’t true but I’ve looked into it and it seems I’m not alone in this experience.
- The Canadian government’s regulation arm for banks, the Financial Consumer Agency of Canada, suggests turning to your bank’s complaint-handling process to resolve this exact situation.
- Banks make a lot of money on the backs of low-income people. In the U.K. unpaid item and unauthorized overdraft charges account for a whopping 30 per cent of bank revenues from current accounts.
- Those who can afford overdraft protection don’t face this problem. But banks don’t offer overdraft protection if they deem your debt-to-income ratio to be too high.
- The Financial Consumer Agency of Canada says: “If the post-dated cheque is cashed early, you can ask your financial institution to put the money back into your account up to the day before the cheque should have been cashed.”
What can you do
- Take a yellow highlighter and make the date on the cheque stand out.
- Don’t write post-dated cheques unless you completely trust the other party and you are certain they will not deposit the cheque early.
- Demand that your bank refund NSF charges. Go higher up in your bank’s complaint-handling process if your branch gives you any grief.
- Leave your bank if they treat you badly.
I can’t believe there is so little protection for bank account holders. It’s all very well for banks to have a complaint-handling process but as a bank client the onus is on you to advocate for yourself and it may be humiliating, with your bank questioning you about how you manage your account and your financial situation and lecturing you on how refunding the fees will lose them money – or at least that was my experience with the account manager at my local Royal Bank of Canada branch.
I don’t believe refunding me that NSF fee hurt my bank at all. In November 2012 the Royal Bank of Canada posted a record annual profit of $7.5 billion. It’s Canada’s biggest bank.