Payments Puzzle Persists at Banks

July 29, 2014
Wall Street Journal 
overdraft news
Hundreds of small and regional banks continue to process checking-account transactions in order from the highest amount to the lowest, a policy that can trigger multiple overdraft fees in the same day.

While nine of the top 10 banks ranked by assets have abandoned this process in the face of scrutiny, about 16 percent of other U.S. financial institutions continue to use the "high to low" system. Most others have switched to deducting payments in chronological order, according to a Moebs Services poll of more than 2,000 banks, thrifts, and credit unions.

The persistence of some banks in using the controversial ordering system is drawing criticism from advocacy groups. "We continue to hear from consumers who are frustrated and feel that this practice is wholly unfair," notes Ruth Susswein of San Francisco-based Consumer Action. The federal Consumer Financial Protection Bureau (CFPB) and Pew Charitable Trusts also have challenged the integrity of high-to-low processing; and the CFPB is considering whether to draft rules governing overdraft policies.

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