When you sign up for a new banking account or loan, you’re likely to come home with an entire envelope of paperwork. But have you ever stopped to actually read all that fine print mumbo jumbo? In the case of financial accounts, what you don’t know can lead to financial hardship. Here are a few examples of what I mean.
Mortgage Fine Print and Insurance Checks
Several months ago, one of my favorite restaurants housed in a 1900s two-story home burnt to the ground. It was a tremendous loss to our community, and former patrons regularly inquired as to if and when the restaurant would reopen. The owners planed to rebuild, just as soon as the insurance check came through.
When that check finally arrived, the owner took it to the local bank, which also owned the mortgage on the ruined building. When attempting to cash the insurance check so repairs could be scheduled, the owner was informed that he would receive $0 in return. The bank would be applying the amount of the insurance check toward the mortgage balance. Furious, the owner tore up the check at the counter and stormed out, vowing to return with legal representation. Unfortunately, once the fine print of the mortgage was examined, the restaurant owner found the bank held legal rights to confiscate the check, as well as the balance of any of the owner’s personal or business accounts in order to pay off the mortgage. The restaurant remains closed. The owner moved all of his personal accounts to a different, national bank, and spread the word about the incident to warn others.
Checking Account Mix Ups
Earlier this year, my friend and his wife took a large container of quarters into their local bank, along with a deposit slip for one of their two checking accounts. The saved change was to fund their long-planned long weekend vacation to the ocean. The teller stated it would take awhile to run the quarters through the counting machine, and they would be charged a fee for the service. The couple agreed, and a few days later received a deposit receipt in the mail.
A week later, they received notification that their hotel reservations for their vacation had been cancelled due to insufficient funds backing their provided debit card. Confused, they examined the deposit receipt more closely and discovered that the teller had somehow deposited the $500 in quarters to the wrong checking account. In the meantime, the bank transferred funds from one of the couple’s checking accounts to cover the charges attempted by the hotel, thereby totally messing up the couple’s records for both accounts.
Frustrated at the multiple mix-ups, they made an appointment to see the bank manager. The deposit from the quarters was then placed in the correct account, but when asked about the shifting of funds from one account to another, they were informed the bank had every right to do so to cover any charges made to the account. The manager brought out a copy of the fine print and cited some vague reference that he claimed gave them legal right to obtain the funds from any account held at the bank. They further questioned why someone at the bank, which was a small-town branch of an Ohio-based bank, didn’t contact the couple to tell them what was going on. Surely, a courtesy call was in order in this circumstance. Didn’t they need permission before claiming rights to any funds from another account? The answer given was no. Notification was not required, nor was permission of the account holder necessary.
While legally, the couple may have had grounds to seek legal recourse against the bank for the mix ups, they chose to change banks and notify their friends and family of the bank’s liberally interpretation of the financial fine print to suit its needs. Word spread fast, and most people acquainted with the couple moved their financial business to the much friendlier local credit union (after asking about the financial fine print on new accounts).
What does your financial fine print say? Do you know the intimate details of what you bank can and cannot do with your hard earned money?