Fifth Third Bank Changes Debit Procedure

Some good news has come out of the class action lawsuits dealing with overdraft fees. The lawsuit against Fifth Third Bank still has one more hurdle to overcome, but most likely, customers who have paid overdraft fees for debit card transactions may see some or all of these fees refunded.

Also as a result of the law suit, Fifth Third Bank will be changing the way it processes customers’ debits and credits. Currently, debits or withdrawals are posted to the account from largest to smallest, like many other banks. The banks that do this often say that the reason is to allow the large, more important debits like mortgage payments and rent checks to process first, assuming smaller amounts are less important and could therefore bounce or draw an overdraft fee. The more likely scenario is that this large payment will cause the first overdraft and associated fee, and then every subsequent, smaller debit will cause additional fees.

Reader Tom S. wrote in to say that after inquiring, Fifth Third notified him that this process will change as of March 25, 2011.

First: All deposits (including funds available from pending deposits) made prior to the end-of-day cutoff.

Next: All pending and posted date/time stamped debits will be deducted from the customer’s balance. Date/time stamp debits include all:

• Debit card transactions (both PIN and POS)
• ATM withdrawals
• Transfer from the account initiated via Internet banking or an ACE transfer

Finally: All other batch debits will process next in highest to lowest dollar order. These are transactions the customer initiated that are processed once per business day such as:

• Checks
• ACH debits
• Bill Payments
• Account Fees

This is great news. This is a process that makes sense.

Keep in mind that this doesn’t mean you can deposit a check on Monday and expect the full amount to be available first thing on Tuesday. Local checks are often processed faster than non-local checks. There are a few differing definitions of local checks, but for the most part, it means that the bank branch that issued is located in the same processing region as the bank of first deposit. Either way, there may be a delay of a day, five days, or more than ten days until the bank makes those funds available for you.