Two of my checks and two ACH charges were returned because of insufficient funds. One of the checks exceeded the amount that I had in my account, but the other one could have been processed with what was there. Why does the bank process the largest check first? Is there any way I can limit my overdraftfees by having the bank process the other check first?
Under the Uniform Commercial Code, which is the law in each state that covers this question, a bank may process items (checks, ACH charges, etc.) in any order. In general, as you've discovered, if largest items are posted first, more checks will potentially be subject to overdraft or bounced check fees. If smallest items are posted first, fewer checks will trigger those fees. A glib answer would be that you can limit your exposure to such fees by managing your checking account better, but that ignores the fact that mistakes and overdrafts do happen.
The only other way to influence the order of payment of items on your account is to ask area banks what their posting order policies are. Are they largest items first? Smallest items first? Numbered item order for checks? Don't expect banks to have a short, simple answer for you, because most banks have very complicated procedures. For example, most banks pay checks cashed over the counter and debit/ATM card items first, because they cannot be bounced, then they pay electronic items next, followed by checks. As noted, checks may be high to low, low to high, check number order (within the day's checks), or order of presentment (if the bank gets checks presented for payment more than once a day). It's anything but simple.
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