Caution - Alabama Credit Union (Especially OOS Families)

Colleges and Universities A-Z University of Alabama
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<p>In other threads I have been an advocate of opening an account at the Alabama Credit Union - which has had, and soon will have a remodeled branch at the Ferg. It is very convenient for students, accounts are free (except for the one time $1.00 new relationship fee) and eliminates nuisance ATM fees. However, I have just had to deal with their “policy” concerning holds on deposited checks - unfortunately, their policy does not appear to comply with The Federal Reserve Board’s Regulation CC which applies to all banks and credit unions. </p>

<p>On Friday, just before I had to leave for BHM, I went to deposit a $600 check to my DD’s and my joint account and was told they would be holding the check for 7 days. I asked why, they said:</p>

<ul>
<li><p>Your account is new (Wrong - federal regulations state that any extra new account holds are only allowed the first 30 days of a new account;</p></li>
<li><p>This is a large check (Not Quite - federal regulations allow banks to issue case-by-case holds only if more than $5,000 is deposited on a single business day);</p></li>
<li><p>This is an out of state check (Yes, but federal regulations specifically prohibit a determination about “reason to doubt collectibility” based upon a class of checks - such as out of state)</p></li>
<li><p>The check is more than your balance (Yes, but that is not an acceptable “reason to doubt collectibility” as defined in the regulaton below);</p></li>
</ul>

<p>The Federal Reserve has indicated that acceptable “reasons to doubt collectibility” are: </p>

<ol>
<li> The paying bank has informed the deposit bank that check was not paid</li>
<li> The bank has received notice from the paying bank prior to presentment that check will not be paid - such as a stop payment has been issued</li>
<li> The check is post-dated or stale dated</li>
<li> The bank has received confidential information to cause reasonable belief the check will not be paid. The examples given are the depositer is engaged in check kiting, the pending insolvency of the drawer or the pending insolvency of the drawee bank </li>
</ol>

<p>Not having the Code of Federal Regulations with me in T-Town, and having to get to the airport, they placed a hold on the deposit. I called today and complained. After being on hold for 5 minutes, they agreed “this one time” to make the funds available (the check posted to my checking account in Chicago yesterday) but insisted they have the right to hold any checks they wanted for 7 days even after I quoted the applicable regulations. </p>

<p>As you might have guessed, I work in bank compliance, so I know how to stand up for my rights. Also my DD has her main debit card with one the largest banks in the country that definitely follows the Reg CC rules - so even if she had to “wait out the hold”, it would make no difference. I’m just upset that for some reason, their regulator (NCUA) isn’t apparently enforcing the Federal Reserve’s regulation the way the Federal Reserve enforces it on “real” banks. I also wanted OOS parents to be aware of this situation if you use the credit union. The convenience of the credit union is real, but these “extra-regulatory policies”, if this is the only account your student has, could severly impact your kid. Remember 7 business days is at least nine calendar days. If you decide to use the credit union, you may need to only make cash or electronic deposits.</p>

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<p>That seems like quite a hassle for no ATM fees. I’m glad my local bank refunds all ATM fees.</p>

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<p>@mattio, true. My other reason for advocating a local bank account, that I forgot to mention is the “lost or misplaced wallet or purse” scenario. The ability to walk onto a local branch and withdraw funds on a signature - without a debit card - is a benefit especially when you are 750 miles from home.</p>

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<p>Thanks for the heads up, bear. Will be sure to pass this on to son, since Alabama Credit Union is now his bank, even though he’ll be attending grad school all the way in Minnesota. Thank goodness for share branches and online banking. </p>

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<p>I have had the same issues with our other credit unions (we belong to four). They all place holds on “large” checks, and especially OOS checks. </p>

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<p>DS and I opened a joint account at a credit union back home. I can add money here as needed, and he can bank at Alabama CU (or any other CU in the country) just like his home branch, with no fees.</p>

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<p>If one ever has problems at Alabama Credit Union, just ask for the red phone. It rings directly to the president of Alabama Credit Union.</p>

<p>The check holding policy at Alabama Credit Union confused me at first. Note that payroll and government checks clear instantly. </p>

<p>Note about shared branching: unless things have changed, the UA branch of Alabama CU cannot access shared branching accounts. One would need to use the ATM. </p>

<p>If one has an account at the credit union where they are making a shared deposit, that credit union may find it easier to cash the checks through its own system and post a cash deposit to the shared branching system. </p>

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<p>This same thing happened with me and Chase when I got my first paycheck. This was a stamped check from a huge company too (like it’s going to bounce). It’s pretty common for all banks with new accounts from I understand.</p>

<p>It definitely must not be illegal for these banks to do so. It was extremely frustrating when it happened to me, but hopefully knowing that all banks do this will at least take the sting off. It’s definitely not just an Alabama Credit Union or general credit union problem. They shouldn’t hold the checks any more after this first time. </p>

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<p>

@dixiedelight - Please reread the first post in this thread. The OP explains very clearly what is and is not legal. Holds may be placed on deposits to “new” accounts for the first 30 days only.</p>

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<p>Back when I was in college, the bookstore had a check cashing window. This was before the days of ATMs. Oh, how I long for the simple days of old! I did have to cash a check recently, for a girls night out, and I had to do some kind of complicated check writing thing at a shared branch to get the money. I couldn’t just write a check for cash. I had to write them a check and do a withdrawal. I’m still not sure what I did and how it was that the bank was debited money, but I figure they know what they’re doing. We’re freaking out as son will have to get quarters for the laundry at his apartment building. Not meaning to go off topic, but how will Bama students who have to do this accomplish this? I know the dorms let you use your ACT card, but surely some kids living off campus will have coin operated washers in their apartment complexes.</p>

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<p>When this situation first happened, my reaction was it was just an “overzealous teller” since what she told me was absolutely contradicted in the published regulatory guidance and every bank consulting website I could find. But after my conversation with their customer service supervisor and comments like M2CK’s above about other credit unions, it appears to be a credit union problem.</p>

<p>UPDATE: The Examination Manuals of the three federal bank examiners (Federal Reserve Board, FDIC, Office of the Comptroller of the Currency) as well as the one federal credit union examiner (NCUA) are published on their websites. The examination procedures for the three bank regulators are quite similar and take up several pages and all require that their examiners investigate the appropriateness of a sample of holds placed due to “reason to doubt collectibility”. </p>

<p>On the otherhand, the examination procedures in the NCUA manual are approximately one paragraph of bullet points and do not mention the testing of “reasons to doubt collectibility”. Their examination procedures seem to concentrate on signage in the branch, the brochure given out when you open the account and the routine hold policy - not exception-based holds.</p>

<p>So, its a long way of saying, if you use a credit union, if the management doesn’t want to adhere to the rules on exception holds, there is a very good chance their regulator will never question them about it.</p>

<p>PS - Dixie, check deposits for new accounts can always be held for up to 9 business days during the first 30 days an account it open. Its unfortunate, but totally allowed at banks or credit unions.</p>

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<p>FWIW - I bank at a small town local bank. Even though I rarely go in the branch, most of the tellers recognize me and I’m never asked for ID. They never put holds on checks from large businesses or organizations such as payroll checks (but mine are direct deposited) or tax refunds (which I generally get direct deposited), but if I give them a check from an unknown source, they always warn that they may put a hold on it and I’ve been banking there more than 10 years. I guess I’ve just never had an URGENT need for the funds immediately so I’ve never worried too much about it. </p>

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<p>I have an account at Wells Fargo and my D has a teen account connected to mine. I transfer money when it is needed. Is that not going to work in T-Town?</p>

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<p>I’m pretty sure there’s a Wells Fargo branch near campus. </p>

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<p>^^In my 28 years of bank auditing and compliance work, I can definitely state that small institutions are the biggest offenders of the funds availability regulations. They tend to be most concerned about bad check losses whereas larger banks acknowledge there will be periodic losses and it’s a cost of doing business. I have no problem if a bank uses available LEGAL reasons to hold a deposited check. It’s the holds in violation of the regulations that tick me off.</p>

<p>Dealing with a larger bank can be much easier. Last night around 7:30 pm I wrote a $7,000 personal check off my money market account at a small suburban bank (that has higher interest rates) and deposited it to my main account at Bank of America via ATM. School expenses are due! The entire $7,000 was available this morning.</p>

<p>jrcsmom - did your bank give you a written notice of an extended hold? Were your checks over $5,000? Extended holds can only be made with written notice given directly or by mail to the depositors. Assuming your account is in good standing concerning overdrafts, and that it hasn’t been told your checks for deposit won’t be paid, (and the other reasons I listed above) no additional hold is allowed unless the total deposit isore than $5,000. </p>

<p>Ultimately this all an exercise in “risk management” by the various parties. The management of institutions that play “fast and loose” with the rules view minimizing the risk of check losses as more important than than regulatory and legal risk from cited violations or lawsuits (The big gun is Congress specifically authorized class action lawsuits realizing any individual claim would likely be too small to pursue.). The regulators perform examinations on a risk focused basis. The funds availability regulation has been around for decades and there are dozens of other new rules so funds availability may not get as much attention as it use to. And most customers don’t understand the law or regulation and just accept whatever they are told and don’t realize other institutions have a much more favorable practices.</p>

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<p>Worked as a teller for 10 years from high school thru college and a few years after.<br>
There are several things that teller could have done by simply looking at the check being deposited:

  1. Check number? If it is a high number that is typically going to be a long standing account. Granted, nowadays w/ internet banking we don’t use as many checks as we once did.
  2. Name on the account. Should have been it was pretty obvious it was mom/dad putting into students account.<br>
  3. Even if she did feel like putting a hold on the deposit that is a LONG time for a hold in todays world. 3 days should have been plenty! </p>

<p>We bank at 2 local independent banks w/ several branches here at home. I’m not a fan of big banks, just did not care for some of their practices be it towards employees or customers. I’ve never had a problem making a deposit of any amount. But, we also have large commercial accounts at both banks in addition to our personal checking and mm accounts. They know us very well at the 2 branches closest to us. They have been known to call us just to make sure a charge may be uncharacteristic (out of state or country), but, they pretty will know our patterns, SAD in a way. If they told us they were going to put so much as a 3 day hold on a check, uh, no. </p>

<p>We just had D open an account in Tuscaloosa at Capstone Bank. We have been working with them for the condo we are purchasing there. Have never met them but they have been way beyond helpful. Can’t wait to meet them next week to thank them for all of their help. They have a free students account and very close to campus on University Dr. </p>

<p>I used to be a fan of credit unions until the local one we used for a few years started pulling stunts like that and lost that personal service, seemed they didn’t care. They would put holds on payroll checks even if it was drawn on the bank down the street. </p>

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<p>My S is a rising Junior from OOS. He does not have a local bank account - he keeps his OOS one and I’m on that account too and can do a bit of helicopter banking for/with him. Phone apps can deposit checks wireless-ly into accounts…you can get cash back from any retail transaction (use retailers as ATM)…bills are paid solely online… </p>

<p>My point to families new to UA: don’t be scared about not having a local banking account for your student. It is very possible for OOS students to function perfectly fine without a local bank account in Tuscaloosa. If you are happy w/ your current OOS bank, stick with them.</p>

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<p>I guess I feel strongly both ways.</p>

<p>I’m sympathetic to OOS parents who expect a certain (and lawful) level of banking responsiveness. I’ve gone off on my share of clueless clerks who inappropriately judged a book by its cover, or attempted to bluff with or hide behind fictitious rules and procedures.</p>

<p>As aeromom says, it’s perfectly fine to use an OOS bank with an ATM at the Ferg or Publix cash back for walking around money.</p>

<p>We opened an Alabama CU account for a couple of reasons. DS had a more substantial acct at home in another institution that was fenced off for foreign study or vacation trips with new friends. I felt the separation was the safer way to go. (Turns out that separation was extremely important, but that’s not relevant here.)</p>

<p>A second reason is that DS prefers to avoid PIN transactions. If he needed $20, he walked up to a teller. Everywhere else he ran his charge as a credit. </p>

<p>Many kids are new to the world of banking, and have not established personal preferences and good habits. I’d guess that most (in general, not CC) kids live with smallish balances, testing zero on a fairly regular basis Rejected charges, overdraft protection transfers, confused users, quick deposits to cover unexpected expenses are the norm. Serving the financial needs of college kids is not for the faint of heart. </p>

<p>It doesn’t bother me to have my DS growl with frustration when he tries to cash a random snail-mail grandma-check, only to find out that he needs more than $1.31 balance to avoid a lengthy hold on the check. </p>

<p>I’m just making the observation that sometimes having a local branch fits the situation. </p>

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<p><<<<
We’re freaking out as son will have to get quarters for the laundry at his apartment building. Not meaning to go off topic, but how will Bama students who have to do this accomplish this? I know the dorms let you use your ACT card, but surely some kids living off campus will have coin operated washers in their apartment complexes.</p>

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<p>Don’t freak out! lol…He can go to any bank with cash from his ATM and get rolls of quarters…he probably could also do this at many/any grocery or drug store. I imagine that if I went to any CVS or Walgreens or grocery store with cash and asked if I could get a roll of quarters, they would let me “buy” one. </p>

<p>If he has the cash now, he could get 100 dollars worth of quarters…that should last him awhile</p>

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<p>We just recently opened an Alabama Credit Union account for my younger son who will be at UAH. We did so because there is a branch on campus as well as several ATMs. This was something my son wanted because he does not have a car at school, and our home bank, while it has branches in Alabama, is more than a mile away. This is a convenience factor for him, and I can transfer money from his credit union account to ACU without hassle. </p>