A recent accounting error resulted in my checking account being overdrawn by $250 and me being charged $245 in overdraft fees as a result. Here’s why.

Large to Small Transaction Processing

Many banks these days, in an effort to extract as much money as humanly possible from their customers, have begun processing checking account transactions in order of largest to smallest. This is why I ended up being charged $245 in overdraft fees for what should have amounted to one overdrawn transaction.

In my case, several transactions cleared on the “big fee day” as I refer to it now. At the time I had about $1500 in that particular account. The largest transaction to clear that day was a check I wrote of $1,400. There were 8 other transactions to go through that day, the total of all of these adding up to $350. One of these transactions was a car payment of about $300; the remaining $50 in transactions were small purchases like a pack of gum, a Starbucks stop, etc.

So, had my bank processed my transactions in order of smallest to largest, the $350 in smaller transactions would have cleared just fine and I would have only been popped with one overdraft charge. Instead, they cleared the $1,400 check first, then the $300 car payment overdrew my account, resulting in the first $35 charge, followed immediately thereafter by 6 more small transactions and six more overdraft charges of $35 each!

Just because of the way the bank chose to process my transactions I paid seven overdraft charges totaling $245. Had the bank processed the transactions in the reverse order, the first seven transactions would have cleared just fine, with the $1,400 check being the only overdraft.

So, $245 vs. $35 just because of the way the bank chooses to process transactions? That’s a scam if I ever heard one. And don’t think the bank has any excuse for this either…trust me, I asked.

Bank’s Excuse #1

When I called to object to such a ridiculous system I was told that the bank did a study and the customers prefer to have transactions processed from largest to smallest. When I asked why or for any information at all about that study, the customer service rep didn’t have an answer, neither did her supervisor, and apparently nobody does because they told me they’d have someone to call and follow up with me…no one ever called.

Bank’s Excuse #2

When I pushed a bit more, I was told that processing transactions from largest to smallest ensures that the important bills get paid…the bank is assuming your most important bills are probably the largest. Ok, fair answer at first glance, but wait…every single one of my transactions were paid, including the $1,400 check that overdrew my account. When I brought this up, the supervisor said, “well, sometimes they won’t all get paid.” When pushed, she had no real answer to when those “sometimes” were.

Bank’s Excuse #3

After about 20 minutes on the phone and a handful of questions but no answers, I requested that the order of my transaction processing be changed. No can do, I was told, apparently the bank does not have the ability to change the order of the transactions.

So It All Boils Down to This…

Ok, so let’s make sure I’m clear on this.

  1. Transactions are processed in a way that will always result in the most fees for the bank.
  2. Someone, at one point in time, studied some customers and found that they wanted their transactions processed from largest to smallest, but the actual location or means by which someone can get a copy of this study is completely unknown.
  3. The bank processes transactions from largest to smallest to ensure that the largest, and presumably, most important payments actually clear, but all transactions cleared so that doesn’t make any sense.
  4. The bank is incapable of changing the order of transaction processing for its customers and they have no idea why that is.

Ok, I think I’ve got it now. By the way, the bank was Fifth Third.

Categories: Finance


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