Order in clearing cheques - is it the same as in the US?

JohnPeard

https://www.banknet360.com/news/NewsAbstract.do?na_id=6291&service_id=1&bi_id=

According to the above link banks in the US deliberately order the payment of cheques on a given day according to the largest amount, in order to raise revenue of overdraft fees.

"Eight of the country’s 10 largest banks, including Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., and Wachovia Corp., clear checks that arrive on the same day in order of largest amount to smallest, reaping more overdraft fees.

For example, if a consumer has $50 in the bank and three checks for $20, $15, and $45 arrive on the same day, the bank will clear the $45 check first so that it can charge overdraft fees on the other two checks. If the bank cleared the checks in the order of their arrival, the first two for $20 and $15 would have been covered and only one overdraft fee would have been charged"

Does anyone know (or have experience) of the same practice over here?

jonesMUFCforever

No.
There is no similarity here to the US banking system.
If you write out say 5 cheques and they all get presented on the same day to your account your statement will either sort them in cheque number sequence or amount but big brother won't present the biggest first etc etc
If your balance (plus overdraft) won't stand the total amount they will bounce the one cheque to bring your account to order.

iceicebaby

Also you shouldnt be writing cheques if you dont have money in your account to cover them.........but thats another topic altogether!

oldwiring

In the days when banking was 'real' it was considered less dmaging to a customer's credit to bounce the big'un than a lot of tiddlers. Moreover, if a decision to pay, or not, against uncleared items could be influenced by what those items were. A good spread was better than one large item.

gt94sss2

Not quite the same point but I believe in America (and several European countries) that it is actually illegal to write a cheque if you don't have sufficient cleared funds in your bank account.

Regards
Sunil

SparciaM

I don't know if it's illegal, but in most other countries they don't have an Overdraft system, there is no such thing. We in the UK are one of the very few that actually have overdrafts. I know in some places in EU they just don't pay it, simple as. A DD will just not leave ur account or a chq will bounce, I don't know about the charges etc, but I remember reading in the guardian one Saturday that some people from the EU came here to do banking and were amazed at the overdraft facilities of actually letting people spend money that isn't theirs.

I think that is what people need to realise, an overdraft is not yours. If you go into it every month, then you're spending more than you're earning simple as. I have an OD on my account and think I've been in it about twice and also get money into it to bring me back into credit within the week.

I work in Collections for a UK bank (it's annoying, boring and not good - but pays the bills until I get my proper job ) and I try and tell people that the £2000 OD they have with a £1000 income a month job isn't theirs. I tell them that in essence they earn £1000 a month and spend £3000 but they don't seem to get it.

DavidHM

Er... they don't SparciaM, unless they end up £2k deeper in than they started.

If they have a £2k overdraft at the end of the month and on payday that falls to £1k, they've spent £2k more than the've earned over the period since they last had a zero balance at the end of the pay month, whenever that was - it could be ten years ago.

If they had spent £3k this month then they'd be £4k overdrawn and you'd be screaming even louder than you are.