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Home >> My Bank Said ...
Bank Pays Large Items First, then Assesses Fees
Can you tell me why my bank processes items from largest to smallest amount when presented on the same day? It seems to me that they do this in order to collect more fees from me if I have insufficient funds. I'll have one large item not clear, whereas three smaller ones will, and then I am charged fees on all four transactions. Is this legal for my bank to do this?
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 There is no way to actually know your bank's motive for adopting the "largest first" policy. Some banks say their customers benefit from the practice because critical payments, such as rent, tax payments, credit card and loan payments and the like, will tend to be paid more often. Regardless of your bank's reasons for adopting that posting procedure, there can be no denying that it results in more overdraft fees on customer accounts. However, there's no effect on your account unless you do, in fact, overdraw your balance. It's the "what if?" that you are concerned about.
There is no federal rule that requires or prohibits any particular posting order policy. To the best of our knowledge, there are no limiting state rules other than a Uniform Commercial Code provision that permits banks to post transactions in any order at all. The primary regulator for federal savings associations has stated that, as a best practice, savings associations should not administer their posting order policies unfairly or manipulate them to inflate fees. Transaction posting order is one of the issues that has generated a lot of consumer complaints and scrutiny from both banking regulators and members of Congress.
Published on BankingQuestions.com 10/08/09
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