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As you tackle your holiday shopping list, be forewarned that your bank could be rearranging your debit card transactions, checks and other withdrawals in a way that ups the chances that you overdraw your account multiple times, racking up multiple fees.

It's a practice long decried by consumer groups, and one that continues to confound consumers.

"[People] think transactions are processed in the way you do them, but that's not necessarily the case," said Susan Weinstock, director of The Pew Charitable Trusts' Safe Checking in the Electronic Age project.

"We want to make sure banks are not doing things intended to simply maximize overdraft fees."

Traditionally, banks have processed checks, and more recently debit card transactions, from highest amount to lowest. They say they do it that way to give priority to customers' most important bills, such as mortgage payments.

That policy, however, tends to drain an account more quickly and trigger the most overdraft fees.

The Center for Responsible Lending likens the practice to "cooking the books" in favor of the financial institution.

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Overdraft fees

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Here's how it works: Say a customer starts with a $90 checking account balance and uses a debit card to buy a $5 latte, followed by $30 in gas and a $100 parka.

If the transactions were processed in that order, the latte and gas would go through, but the $100 parka would overdraw the account and trigger a typical $34 overdraft fee.

But if the bank reordered the transactions, processing them from high to low, the $100 parka would immediately put the account in the red and result in three overdraft charges totaling $102.

"We understand not everything comes in [to the bank] at the same time the consumer does it -- a check may be held for a while. But the idea is if the bank is doing something just to maximize overdraft fees, that should be prohibited," Ms.Weinstock said.

She said financial institutions should be required to process transactions "in a neutral way," such as chronological order.

The good news is that banks are starting to heed the call for change.

Some of the nation's biggest banks, such as Citibank, Chase and Wells Fargo, recently announced they will no longer reorder high to low for at least some types of transactions.

This summer a directive from the Federal Deposit Insurance Corp. took effect, warning banks that it supervises against purposely clearing the biggest transactions first. The directive applied to the nation's roughly 4,700 mostly smaller state-chartered institutions regulated by the agency.

Pew estimates that nationwide, 40 percent of deposit volume is no longer subject to reordering.

"We think it's time for the other 60 percent to come along," Ms. Weinstock said.

On the plus side, most banks process deposits and other credits to an account before subtracting debits, she said.

Among the top 10 banks in the Pittsburgh region, the top three -- PNC, Citizens and First National Bank of Pennsylvania -- said they reorder checks and debit card transactions to process them from highest amount to lowest.

Market leader PNC posts high to low because the largest transactions "typically represent the payments most important to our customers, such as their mortgage or auto loan payment," spokesman Fred Solomon said in an email.

"We offer numerous ways for customers to track their account balances, and customers can sign up for PNC AutoAlerts that warn them when their balances are low."

Spokeswomen for No. 2 Citizens and FNB, which is set to become the region's third biggest bank when it completes its take over of Monroeville-based Parkvale Savings next month, also said high-to-low ordering was based on the idea that customers wanted the biggest transactions processed first.

The area's seventh biggest bank, Huntington, also processes checks and debit card transactions from high to low. But an executive there said that soon might change.

"We're still in agreement with many of our customers that a chronological order based on transaction time and/or check number is the more logical approach," said Bryan Carson, senior vice president of deposit products.

But he said the bank was waiting for final guidance on posting order from big banks' main regulator, the Office of the Comptroller of Currency.

"We thought the final guidance would be provided in the fourth quarter of this year, but it's still not done," Mr. Carson said in an email last week. "We're waiting for that guidance before we make any changes because the technology investment is significant, and we aren't 100 percent sure our desired changes will align with their final guidance."

No. 4 Dollar Bank and No. 5 First Niagara both said they reorder checks from high to low, but process debit card transactions in the order they come in.

Among the rest of the top 10, First Commonwealth, Northwest Savings and ESB Bank employ policies that most closely match methods favored by consumer groups.

First Commonwealth said it processes checks by check number and debit card transactions from low to high, a policy the Indiana, Pa.-based bank implemented last year.

Northwest and ESB said they process checks and debit card transactions in the order they come in.

No. 8 S&T Bank issued a statement saying the bank "generally" processes checks based on the check number and debit card transactions according to the date and time. But the bank added that "the posting methodology employed varies depending on risk."

Ms. Weinstock noted that the surest way consumers can avoid being blindsided by a cascade of overdraft fees is to leave a cushion of money in their accounts.

Consumers also should ask their bank if it reorders transactions, she said. "Hopefully they will tell you."

In addition, Ms. Weinstock said people should think twice before signing up for overdraft protection on debit card transactions. Customers who don't opt in for coverage have their debit card transactions denied at the register if there's too little money in the account to cover them, instead of letting them go through and getting a fee.

In 2010, federal regulations kicked in requiring banks to get customers' permission before enrolling them in overdraft protection on ATM and debit card transactions. The opt-in requirement doesn't apply to checks, however.

Pew is pushing for the new federal Consumer Financial Protection Bureau to prohibit banks and credit unions from manipulating transactions in a way that maximizes overdraft fees.

The group also is urging banks and credit unions to adopt a standard, one-page disclosure box that outlines major checking account terms, including the order in which withdrawals and deposits are processed, so consumers can comparison-shop for a bank account. The proposed disclosure box can be seen online at http://www.pewtrusts.org/our_work_report_detail.aspx?id=85899359190.

The bureau "should require the box, like a nutritional label," Ms. Weinstock said.

"If you're on a low sodium diet, you can pick a can with the lowest sodium. You could pick a checking account in the same manner."

Bank clinginess is an underrated factor in why a lot of people stay with banks they don't like. Between the difficulty of transferring bill pay and other services, and banks' fussy rules on how exactly an account can be closed, banks tend to get all "Fatal Attraction" (or "Fear," if you prefer your psychotic paramours to be male) on you when you try to break things off.

From Robin Sidel of The Wall Street Journal:

Consumers are discovering that it isn't always easy to break up with a big bank.

When Ray Parente decided to pull his money out of Wells Fargo & Co. last month, he was told that he would have to discuss the decision with a personal banker at his local branch in Orange City, Fla.

Rather than wait in a long line to see the banker, Mr. Parente went to a teller window and withdrew all his money -- except for two cents. "I kept as little as I could in there to keep it open just to screw with them," says the unemployed real-estate broker in Deltona, Fla.

From stall tactics to unexpected fees and awkward conversations, other customers of big banks are running into similar snags when trying to move their money elsewhere.

Forcing a customer to show up in person to say goodbye may seem innocuous, if a little inconvenient. But what if you're disabled or bedridden? Or you've moved to a city where the nearest branch of your old bank is 100 miles away?

And that's not even including the overdrawn-with-fees death spiral that can happen with accounts like the one mentioned in the WSJ article. If Parente fails to close that account with 2 cents in it, he'll probably begin incurring a monthly maintenance fee, as he probably won't meet the minimum balance or direct deposit requirements needed to waive the monthly maintenance fees on a typical checking account these days.

After that happens, his account will become overdrawn, and then he won't be able to close it without getting it back to zero, which will mean another trip to the bank and more money out of pocket. If he fails to do that, the bank will continue hitting the account with monthly maintenance fees, until it closes his account for him. Then Parente will probably be reported to ChexSystems, which will prevent him from getting another checking account for at least five years.

That type of spiral can have serious financial consequences, possibly consigning Parente to the ranks of the unbanked, who typically pay more than bank customers for things like cashing paychecks and making cash withdrawals.

I blogged about a bill introduced in October that would have made it easier to switch banks by banning just these sorts of shenanigans. The comments I got were interesting. Some were supportive of the legislation, but a few were more of the "less QQ, more pew-pew" variety; they were basically of the opinion that switching banks is easy enough and why don't you stop whining already. An example, from a reader who frequently posts on the banking blog under the nom de plume "Wolverine":

What's so hard about switching accounts now?

If we really need governments to make this easier, than there is something REALLY wrong with us. I've done this before and it was simple.

The problem with that line of reasoning is, what may be true in Wolverine's experience may not be for other bank customers. There doesn't seem to be any set standard for what banks can require from customers to close an account, and that opens customers up to tactics that can cause everything from annoying inconveniences to serious financial consequences for the crime of not wanting to be bank's customer anymore.

It began on Sept. 17 with a few hundred people gathering in lower Manhattan. The protest -- against banks, moneyed influence in Washington, corporate power, and a host of other loose causes -- rated only sparse mention at first, even in the local press. Their targets saw them as goofy.

No more. Police this week rousted protesters from their Zuccotti Park encampment in a maneuver planned with military precision. Today the Occupiers -- this time, by the thousands -- were back on the march, swarming the streets around the New York Stock Exchange, clashing with police, and enraging stock exchange employees.

So at two months, what are Occupy Wall Street's wins and losses?

WINS

--Bank fees: Every time you use your Bank of America debit card and don't pay $5, thank Occupy Wall Street. The decision by big banks earlier this month to roll back their debit-card fees marks the first successful popular uprising by consumers against fees. And, considering the banks' years-long success in loading them up, that's no small achievement. Yes, much of the pressure came from the Bank Transfer Day effort, led by Kristen Christian, a Los Angeles art gallery owner who isn't a direct supporter of OWS (that's her logo to the right). But the debit fees never would have been rolled back -- and 40,000 people wouldn't have transfered accounts to credit unions -- without the accelerant provided by OWS.

--Changing the national conversation: Coming out of the summer, the economic debate in Washington was dominated by talk of cutting the deficit -- not jobs, not the wealth disparity in America, and certainly not the role of money in politics. Today that has shifted. Part of my job here each morning is to aggregate stories about the wealth debate; the volume of candidates is impressive. You can see the change in a Google Trends chart of web searches and news references for the term "income inequality." An analysis of the #OWS Twitter hashtag (thanks to my colleague Dan Fletcher) shows a rise over the past month, spiking ahead of the Zuccotti police action.

There's been a more subtle shift. Note the number of times that Occupy Wall Street is used as a reference point in analyses of issues ranging from mortgage relief to student loans to taxation. It has lent urgency and weight to what may have seemed like dry policy discussions. In Washington, the GOP in general remains dismissive of the protests. Some on the right support the criticism of corporate bailouts, though they see the protesters as misguided. President Obama first mentioned (as best I can tell) OWS on Oct. 6, going to great lengths to frame the movement around his own policy proposals. His press secretary has taken questions on the movement at nearly every press conference since then.

--Getting Wall Street's attention: Perhaps even more impressive is how OWS has seeped into Wall Street's own conversation. This is partly due to the early attention paid by a few influential financial bloggers, such as bank critic Barry Ritholtz. But bankers were clearly stung by the 1% tag and angered by suggestions they hadn't earned their bonuses. An Oct. 11 march to the Upper East Side Manhattan homes of JPMorgan CEO Jamie Dimon and hedge fund chief John Paulson got moguls' attention. OWS even began popping up as a "risk factor" in several corporate financial filings with the Securities and Exchange Commission and in analyst briefings. As Footnoted.org pointed out, in the financial world this is as good an indication as any that a movement has "truly arrived."

LOSSES

--Public perception: The increasing seediness of the "permanent" OWS encampments -- and a handful of highly publicized acts of violence in or near the camps -- provided a basis for the police crackdowns in Oakland, Portland, and New York. It wasn't just the New York Post and its energetic efforts to link OWS to street crime everywhere. Small businesses around Zuccotti Park may have grumbled at first about protesters filling their bathrooms and police blocking foot traffic, but many supported the right to demonstrate. By the end, some businesses were planning their own protest against the city's failure to clear the camp.

If the movement becomes centered more around symbolic marches and other protest actions, a bigger concern may become the potential for violence -- by protesters or police -- and how that comes to be perceived. In New York on Thursday, police said five protesters were charged with felony assualt, and several officers and protesters were injured. In Oakland, the Occupiers' successful march to shut down the city's huge cargo port was marred by the subsequent window smashing and other acts of property violence by a small number of protesters. Organizers have stressed non-violence. Whether they can keep a lid on their angriest protesters may well determine the movement's staying power.

--Zuccotti Park: How important is it to have a home base -- or, as my colleague Mark Gimein puts it, a stage from which to perform? When the city cleared away the tents at Zuccotti Park, it may have done the movement a favor, giving its first act a dramatic (non-violent) climax and freeing it to move on to more focused actions. Or it may mark the point where the media loses interest.

The bottom line: Those "occupy" web searches may have peaked, and the public may prove to have little stomach for street clashes. But it's hard to see the big issues raised by the Occupiers fading anytime soon. Especially as the real street theater -- the 2012 presidential race -- wheels into view.

Unemployment is one thing, but getting charged to use the prepaid card your weekly benefits are on is another.

Just ask Shawana Busby, the out-of-work resident in South Carolina at the center of Janell Ross' Huffington Post write-up about Bank of America's latest indiscretion: charging the unemployed for using their prepaid cards out-of-network. Busby estimates she's paid about $350 in fees, despite the fact this is all she has to live on.

Bank of America may have just done away with its $5 debit card fee, but with states like South Carolina partnering with big banks to save on printing and mailing costs (an estimated $5 million in South Carolina's case, according to Ross), the unemployed, many of whom are unbanked, are feeling the fallout.

Writes Ross:

"In short, the same banks whose speculation delivered a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: The larger the number of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits."

What do you think, is Bank of America back to its shady old tricks? Or does the bank provide a service to cash-strapped states?

Just because the monthly debit card fee battle has been won doesn't mean banks are gonna stop trying to squeeze more profit off basic checking accounts. Here's a bunch of the recent fees banks have invented:

BofA - lost debit card: $5. Rush delivery: $20
TD Bank - inbound wire transfer fee: $15
U.S. Bancorp - deposit money via cellphone: $.50
BofA - basic MyAccess checking: $12/month, up from $8.95
Citigroup - basic checking account: $10/month, up from 8.
All banks - average interest rates: down to an average of .74% from .8%.

NYT says it costs banks $200-$300 per year to keep a single retail checking account open. They're going to keep looking for ways to recoup that now that the fees they can charge for debit cards got chopped.

"They have got to make up the income some place," Vernon Hill II, Commerce Bank's founder, told NYT. "I think we will see a lot more fees."

Banks Quietly Ramping Up Costs to Consumers [NYT]

Stuff like this didn't get the attention of the debit card fees, thus isn't being rolled back:

On May 24, Bank of America will raise the monthly fee on its most popular checking account from $8.95 to $12. On June 27, it will start charging customers a $35 fee if they overdraw their account by less than $10. And next year, the bank plans to replace its basic checking account with a new "essentials" account that comes with a monthly fee that cannot be avoided.

At Chase Bank, fees have increased for overdraft transfers, outgoing wire transfers and stopped payments. New customers that sign up for a basic checking account face a $12 monthly charge, up from $6.

Experts warn consumers to expect more of these and other moves by large banks to boost revenue.

Luckily, you can do something about it, like the 700,000 people who have moved to credit unions since October. So take out your cash and move it to non-profit or local community banks and credit unions. It'll save you money.

"A credit union is going to smoke a commercial bank every day of the week and twice on Sundays in the fee column," said John Ulzheimer, president of consumer education at SmartCredit.com. That's because, in contrast to commercial banks, credit unions operate as non-profits.

"Earnings... that the credit union makes devolve to the members in the form of lower loan rates, higher deposit rates and lower fees," said Tony Cherin, a professor emeritus of finance at San Diego State University.

Also, and this might be more important, move your credit card and auto loan debt.

Because of their non-profit structure, credit unions usually offer more competitive rates than big banks on things like credit cards and CDs. For example, Citi's Platinum Select Mastercard has a variable APR of between 12% and 22% (after an introductory APR of 0% for the first 21 months) compared with the 10% purchase APR offered by the Pentagon Federal Credit Union, according to Bankrate.com.

The good news first: You're unlikely, at least for now, to face a fee for using your bank debit card to make purchases. All the big banks have now backtracked on their plans to levy such fees. The bad news: Banks are always looking for ways to generate fees from you, their customer.

Read Jennifer Waters's column to find out what to expect in terms of new fees and charges at your bank. Plus, read our story on how to invest your money so it lasts in retirement. Our contributor, Larry Katz, took a hypothetical portfolio and looked at how various withdrawal rates affected it. His findings offer some useful guidelines about how to invest for your future.

-- Andrea Coombes , Personal Finance editor

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Raleigh, N.C. -- Dontarius Dawkins is on a tight budget and says it will be even tighter when he has to start paying $5 a month to use his Bank of America debit card.

"Five dollars adds up every month, considering I'm a college student, so I really don't have $5 a month to pay"" Dawkins said Wednesday.

Bank of America announced late last month that it plans to start charging debit card users a monthly fee starting early next year.

The move comes as new laws cut the fee banks can charge merchants for debit transactions.

Anne Pace, a Bank of America Corp. spokeswoman, said that customers will only be charged the fee if they use their debit cards for purchases in any given month. Customers won't be charged if they only use their cards at an ATM.

The fee will apply to basic accounts and will be in addition to any existing monthly service fees. For example, one of the bank's basic accounts charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.

A fee for using debit cards is still a novel concept for many consumers and was unheard of before this year, but there are signs it may soon become an industry norm.

SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., plans to start charging a $4 fee next month.

Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets. Neither bank has said when it will make a final decision on whether to roll out the fee more broadly.

U.S. Rep. Brad Miller told WFMY News that the fees should be illegal. In response, he has proposed the Freedom and Mobility in Banking Act, which would give customers the right to close an account at any time, even over the phone or the Internet, at no charge.

Due to the fee, Roger Goodwin is considering leaving Bank of America and getting an account with a local credit union.

"They do not have fees, and I also have an account with another bank that is also going to start charging for checking," Goodwin said.

Leigh Brady with the North Carolina State Employees' Credit Union, said the company has seen an increase in new accounts in the last week, which might be a result from Bank of America and others charging new debit fees.

"As a credit union, we are not in the business to make money. We are a not-for-profit cooperative," Brady said. "Credit unions tend to be a better value for consumers ... in terms of offering lower fees and better interest rates."

Coastal Federal Credit Union said it has also seen increased interest, and the company plans to lure in frustrated Bank of America customers by rewarding them with a higher interest rate on checking accounts.  

• Reporter: Tara Lynn
• Web Editor: Kathy Hanrahan

By Ed Perkins, SmarterTravel.com