Years ago I worked at a bank processing overdrafts, I was told that this is a common banking practice- for two reasons. The mortgage/car payment deal and people wouldn't want those returned and then later it was mentioned by a supervisor that its common to process high to low because banks have increased their profit hugely on overdraft fees. This was before overdraft protection was a big thing that they "helped" you with (by the way- you would not believe the people who use their overdraft protection all the time- like its a line of credit!- Its not something they do to help you out- its to make you think OD isn't so bad- the holder of the check doesn't even have to know you were negative- and the bank can collect the $).
Just recently I worked in the sub prime loan industry and I learned that banks - who hate subprime lenders- are actually some of the biggest holders of stock of the companies like I worked for! They would love to get into the short term- high interest loans but it carries a stigma they don't want to risk having! One reason they dislike the subprime lenders is because it was often cheaper for someone who gets stuck in a bind to loan from me than to pay all the OD fees to them. Heres and example- a $200 loan - due back in 2weeks- would cost $31 in fees. Take $200- pay back $231. If you have 4 $50 checks that are going to bounce when you realize you made a mistake in your book then you are looking at probably $30 per check in OD = $120 plus the daily fee they charge when you are in the red. Some consumers have started to realize that and would use short term loans like us and that cuts the banks out of the getting their fees!
Good luck on finding a bank that will process as they come in or lowest to highest- they are hard to come by. Oh- another thing to ask is just how they process their overdrafts- some banks will put it through one day and if it overdrafts- try to run it immediately the next day instead of sending it back thru the Fed and I have seen that really hurt people too.
Just recently I worked in the sub prime loan industry and I learned that banks - who hate subprime lenders- are actually some of the biggest holders of stock of the companies like I worked for! They would love to get into the short term- high interest loans but it carries a stigma they don't want to risk having! One reason they dislike the subprime lenders is because it was often cheaper for someone who gets stuck in a bind to loan from me than to pay all the OD fees to them. Heres and example- a $200 loan - due back in 2weeks- would cost $31 in fees. Take $200- pay back $231. If you have 4 $50 checks that are going to bounce when you realize you made a mistake in your book then you are looking at probably $30 per check in OD = $120 plus the daily fee they charge when you are in the red. Some consumers have started to realize that and would use short term loans like us and that cuts the banks out of the getting their fees!
Good luck on finding a bank that will process as they come in or lowest to highest- they are hard to come by. Oh- another thing to ask is just how they process their overdrafts- some banks will put it through one day and if it overdrafts- try to run it immediately the next day instead of sending it back thru the Fed and I have seen that really hurt people too.
