Banking

How Stop Payments Work--Lessons Learned from My $1500 Banking Mistake

Here’s a lesson I learned the hard way on how “stop payment” works. Asking your bank to cancel a payment may not work the way you think it should.

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Anyone that knows me knows that I enjoy keeping things in good order. Some might call it OCD but I call it being organized and well prepared. Even as I write this, I have my pens aligned by color (rainbow order of course), my notebooks evenly apart from each other and my magic jack phone tucked away at the corner of the desk, so no piece of the phone hovers over the desk. It has to be this way, or I just can’t any work done.

So to write this piece and let the world know that not only have I made a mistake, but a pretty big one that will temporarily devastate my finances is difficult. I’ve always related mistakes with weakness and while I’ve made my fair share (and a few biggies), each new one that comes about just flat out sucks. For those familiar with my $45 Costco theft, you might chalk this one up to karma.

My Mistake

On Friday, the day after Thanksgiving, I sat down in front of my computer to make my usual 15 or so loan payments online. Sitting on a mountain of $225,000 in debt, I have to make many payments to many creditors each month and for the past year, I’ve been perfect. Each payment has arrived on time, without a hitch and my credit score actually starts with a five now instead of a four. Not a huge accomplishment for most, but for me, I’m bursting. But please hold your applause until the end of this article.

So as I make a payment for $100.02, which is a payment for one of my many loans, I accidentally entered $1000.02. It’s a mistake anyone could make I suppose but the second I submitted the payment, I let the expletives fly. For one, I didn’t have enough money in my account to cover this mistake and for two, I had many more outstanding transactions that would come through my bank and they would certainly be returned once this transaction was processed. I learned a long time ago that banks work from the largest withdrawals to the smallest, so to get as many NSF fees out of you as possible. If I didn’t act fast, I was screwed. Bank penalties from Chase and penalties from each of the bounced ACH payments on my loan… I could see $$$ disappearing and my credit score dropping at light speed.

I Initiate a Stop Payment

I immediately called Chase (literally 5 minutes after my mistake) and initiated a stop payment on the ACH transfer. Because I had made payments to this merchant before, they had all the necessary information on file and was told there was a good chance the stop payment would work. “A good chance” is nothing more than a slogan I later learned but we’ll get to that part of the story soon. I was charged $32 for this service and calmed down a bit but my task still wasn’t over. I emailed my loan company (because apparently, the day after Thanksgiving is still a national holiday and they were off) and informed them of my mistake. I asked that if the transaction goes through, I would like the money refunded OR even better, the transaction to be canceled on their end.

Saturday rolls by and the transaction does not show in my Chase account. Nothing exciting there as transactions rarely show on Saturdays. Certainly nothing on Sundays so Monday rolls around and I wake up extra early to check my Chase account. No transaction! Great, I thought I was out of the woods. The transaction did not show and even though I received an email from my loan provider letting me know there was nothing they can do, I was certain that Chase had stopped the payment. That was of course until yesterday when I saw the $1000.02 withdrawal on my account.

The Stop Payment Didn't Work

My initial reaction was that of anger. I pounded on my desk thinking that I had only myself to blame but was also furious with Chase. I had requested a stop payment on an ACH where they had all of the information 4 days before the check was cleared and not only did it not work, but they charged me $32 to do nothing! I went right for the phone and knew I had a battle on my hands.

I initially asked to have the transaction disputed but Chase could not do that for me. Because I was the one that authorized this stupid thing, there was absolutely nothing they could do. I then wanted to know why the stop didn’t work and they said that there is no guarantee that a stop payment will work. So what did I pay $32 for you ask … well that’s a damn good question! I was able to complain enough to receive a refund for that fee but that was only the beginning.

Not only did Chase allow the payment to go through, they did so when I didn’t even have enough funds in my account. I don’t have overdraft protection on my debit card (because I hate that service) but with an ACH transfer, it’s at Chase’s discretion to pay it if I don’t have enough funds to cover the transaction. So that means Chase saw I put a stop payment on this one, and decided to pay it anyway even though I didn’t even have enough money in my account for it. Can you believe that? There’s a 50/50 chance this thing gets declined anyway and I go the extra mile to make sure it doesn’t go through, only my efforts seem to have the reverse effect.

Fees

Now, I’m left with a negative account balance, uncleared payments from other loans which have incurred late fees from Chase and penalties from my loan providers for (1) bounced payments and (2) late payments. In essence, each of the 7 payments that won’t be processed by Chase, now that I have a negative account balance will receive three fees each. That’s 21 fees I will have to pay, with $900 less than I should have had in my Chase account because of my mistake. We’re talking $1,500 or so lost by me because of one little zero. I’m not in a position to get immediate cash in this account so I’ll just have to bite the bullet.

Now all of that money is not “lost” because the $1000 payment on the loan went through, but my checkbook will have $1,500 less in it than I had planned just a few days ago, which is not the way I wanted to start this holiday season. In reading this Greek tragedy, I hope that when you make your online payments, you check, double-check and triple-check how much you are paying because if you use Chase as your bank, there’s absolutely no way to stop the transaction from happening. I learned the hard way and I know that I will NEVER make this mistake again.


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