Citi to clear checks to reduce overdrafts

Citi says it will start clearing customer checks in a way that minimizes the potential for multiple overdraft charges.

In an internal memo sent Monday, the Manhattan-based bank said it will process checks starting with the smallest amounts first as of July 25.

Most banks process larger checks first, a practice consumer advocates say increases the potential for multiple overdraft violations on checking accounts.

The new check-clearing method will only affect checks and automatic payments. Citi does not offer overdraft protection for debit transactions or ATM withdrawals.

Overdraft programs and practices have come under fire in recent years. Under a new regulation last year, banks must obtain consent from customers before enrolling them in overdraft protection for debit transactions.