NEW YORK (CNNMoney) -- For many Americans living paycheck to paycheck, it just got a little easier to avoid hefty overdraft fees.
As standard practice, banks process checks from largest to smallest, which means that if a large check overdraws an account, then each smaller check will too -- resulting in multiple overdraft charges, at nearly $30 a pop.
Citi's new policy of processing checks from smallest to largest will be effective July 25, 2011, although consumer customers will be notified this week, the bank said.
"It's a very consumer friendly policy," said Chris Viale, CEO of Cambridge Credit Counseling, a nonprofit consumer advocacy group. "With things being so tough for consumers out there and people living paycheck to paycheck you have to imagine this is going to be helpful for a large number of consumers."
The median fee for overdrafts is $27, even though the average overdraft is triggered by transactions totaling $17, according to the FDIC.
None of the other major banks plan to follow Citi.
A spokesman for Wells Fargo (WFC, Fortune 500) said its policy of clearing larger checks first ensures that big expenses like mortgage or car payments, which are often the most important, are cashed first.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.92%||3.92%|
|15 yr fixed||2.99%||2.98%|
|30 yr refi||4.01%||3.98%|
|15 yr refi||3.08%||3.04%|
Today's featured rates:
Best Buy is the latest retailer to follow a new trend of week-long sales for 'Cyber Monday.' More
Nearly six in ten black Americans surveyed by CNN/Kaiser Family Foundation say that they or a close friend or family member have been incarcerated -- and a majority of them come from low-income households. That leaves the many families of inmates in a precarious financial situation. More
Watsi crowdfunds donations to cover healthcare costs of those in need. And it's seeing a surprising trend: micro-donations via the popular Chinese social networking app, WeChat. More
Shoppers around the country braved the crowds to get their hands on the best Black Friday deals. More