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||4.48%||4.38%|
|15 yr fixed||3.49%||3.42%|
|30 yr refi||4.47%||4.37%|
|15 yr refi||3.48%||3.41%|
Today's featured rates:
Regulators are set to vote Tuesday on the so-called Volcker rule, a piece of the 2010 Dodd-Frank financial reform law intended to stop banks from taking excessive risks with federally insured deposits. More
The American Dream is supposed to mean that through hard work and perseverance, even the poorest people can make it to middle class or above. But it's actually harder to move up in America than it is in most other advanced nations. More
You have to search the fine print on Tegu's toy block set to find any hint of the company's plan to make one of Central America's poorest cities a better place. More
As usual, Congress has left all the year's major fiscal decisions to the last minute. More