Checks and Balances

Data Visualization August 18, 2014 Read time:

Projects: Consumer Banking & Consumer Finance

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Want to find out about your bank's overdraft policies?
Read Pew's report Checks and Balances: 2014 Update to learn about such policies at the largest banks.

Interested in new rules for bank overdraft programs?
Ask the Consumer Financial Protection Bureau to make your checking account safer.

Bank Overdraft Policies Matter

This interactive tool follows three typical people—Mike, Sarah, and Jen—as they go about their day. They are all responsible with money, but their budgets are a little tight. We will explore how, depending on where they bank, their experiences with overdraft fees can differ dramatically, and why it pays to know your institution's policies and practices. Click on a character to start.

Mike

No ATM and Point-of-Sale Overdraft vs. ATM and Point-of-Sale Overdraft

Sarah

Chronological Transaction Ordering vs. High-to-low Transaction Reordering

Jen

Overdraft Threshold vs. No Overdraft Threshold

No ATM and Point-of-Sale Overdraft vs.
ATM and Point-of-Sale Overdraft

Mike views his checking account balance

In the morning, he finds that he has $175 to tide him over until he gets paid tomorrow.
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Mike takes out cash from an ATM

He notices that he spent all the cash in his wallet the other day, and he withdraws $80 from an ATM. His balance is now $95.
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Mike buys breakfast

He stops at a nearby diner for breakfast and spends $6.63 for his meal using his debit card. His balance is now $88.37.
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Mike pays a bill online

A utility payment for $19.86 is due, and he pays it from his checking account, leaving him with a balance of $68.51.
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Mike stops for lunch

He swings by his favorite restaurant to grab lunch, which costs him $9.99. His balance is now $58.52.
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Mike needs gas for his car

He has a road trip planned for the coming weekend and tops off his tank. It costs him $23.90, leaving him with a balance of $34.62.
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Mike grabs dinner

While Mike is out, he meets some friends for dinner, and they split the check. The bill comes to $18.98, and his balance is now $15.64.
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Mike's car needs an oil change before his trip

The oil change costs $22.53. Bank A declines the transaction, so Mike pays cash. Bank B allows the transaction and charges a $35 fee.
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Mike buys a new toothbrush and toothpaste

The toiletries cost him $6.48. His balance with Bank A is now $9.16. Bank B allows this transaction and charges him another $35 fee.
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By banking at Bank A, Mike would have one transaction declined and have to pay with cash. Had he banked at Bank B, Mike would have incurred two $35 overdrafts for a total of $70 in fees.
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Bank A

Bank with no ATM and POS overdraft

Starting Balance
$175.00

Transaction	Expense	Balance

Bank B

Bank with ATM and POS overdraft

Starting Balance
$175.00

Transaction	Expense	Balance

Chronological Transaction Ordering vs.
High-to-low Transaction Reordering

Sarah views her checking account balance

In the morning, she looks online and finds that she has $175 to carry her through until she gets paid tomorrow.
1 of 10
Sarah takes out cash from an ATM

She withdraws $80 from an ATM, and her balance is
now $95.
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Sarah buys coffee

She stops at a local coffee shop and spends $2.63.
Her balance is now $92.37.
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Sarah buys breakfast

She treats her friend to breakfast at a restaurant and spends $13.11 on their meals. Her balance is now $79.26.
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Sarah stops for lunch

She grabs a quick lunch at a fast food restaurant, which costs her $6.23. Her balance is now $73.03.
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Sarah gets ice cream

After lunch, she treats herself to ice cream from a local shop. She spends $2.40 on dessert and now has a balance of $70.63.
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Sarah needs gas for her motorcycle

She fills up her tank for the work week ahead. It costs $26.03, leaving her with a balance of $44.60.
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Sarah picks up groceries

She runs by the market to stock her fridge for the week and spends $40.29. Her remaining balance is $4.31.
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Sarah goes on a dinner date

She has dinner at her favorite restaurant and spends $18.98. Her account balance is now -$14.67.
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Bank A processes these transactions in the order in which Sarah made them, and it charges her one $35 fee for the overdraft at dinner, resulting in a total balance, including fees, of
-$49.67. Bank B reorders the transactions from high-to-low dollar amounts. Her account is overdrawn after the fourth transaction, which is her breakfast, and she is charged four $35 fees, resulting in a total balance, including fees, of -$154.67.
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Bank A

Bank with chronological ordering

Starting Balance
$175.00

Transaction	Expense	Balance

Bank B

Bank with high-to-low reordering

Starting Balance
$175.00

Transaction	Expense	Balance

Overdraft Threshold vs. No Overdraft Threshold

Jen views her checking account balance

In the morning, she looks online and finds that she has $175. She expects that this will cover her expenses until the check clears.
1 of 10
Jen takes out cash from an ATM

She notices that she spent all the cash in her wallet and withdraws $80 from an ATM. Her balance is now $95.
2 of 10
Jen buys coffee

She stops at a local coffee shop and spends $2.63. Her balance is now $92.37.
3 of 10
Jen pays a bill online

A utility payment for $19.86 is due, and she pays it from her checking account, leaving her with a balance of $72.51.
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Jen stops for lunch

She grabs a quick lunch at a food truck, which costs her $5.89. Her balance is now $66.62.
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Jen picks up her dry cleaning

She pays $40.29 at the cleaners. Her balance is now $26.33.
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Jen goes to see a matinee

She meets her sister at the movies. Her ticket costs $8.57, and her balance is now $17.76.
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Jen meets a friend for dinner

She spends $18.98, and her balance is -$1.22. She is less than $5 overdrawn, so Bank A does not charge a fee. Bank B charges $35.
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Jen gets ice cream

She buys ice cream for $2.40. Her -$3.62 balance is still within Bank A's threshold; no fee is charged. Bank B charges another $35 fee.
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Bank A's $5 overdraft threshold prevented Jen from incurring overdraft fees despite her spending a few dollars more than she had in her account, resulting in a total balance of
-$3.62. Bank B charged Jen two $35 fees for the transactions that caused a negative balance, resulting in a total balance of -$73.62.
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