How Does Money Flow Through Your Members’ Accounts?

By Shari Storm

Last month, the Consumer Financial Protection Bureau (CFPB for short), announced that they would begin new inquiries into overdraft practices.

The CFPB is exploring whether consumers can anticipate and avoid overdraft fees. The CFPB will examine how clearly overdraft terms are disclosed and the extent to which consumers are made aware of, qualify for, and take advantage of, alternative means of covering overdraft transactions.

Many of us believe that we are going to have to disclose exactly how money moves through a member’s account. The CFPB is basically saying that if your institution clears largest checks first, say, then you’d need to tell members that. Or if you process all of your ACH debits before credits, consumers need to know that too.

All this is reasonable. Consumers should know this and it is fair to ask us to tell them.  Being reasonable and fair, however, does not make it easy.

I was tasked with writing the summary of how money flow flows through our members’ accounts. It turned out I had to talk to a lot of staff to get all the details. Frontline, IT, consumer loans and mortgages helped me figure out this puzzle. I thought I’d share with you the complexities of modern banking that I found. I put them in checklist form to make it easier for you. If you are the person in your credit union that needs to pull this together, find the answers to these questions and you’ll be golden.

  • What time do you start your processing each day?
  • How long does it generally take? 
  • Do you process five, six or seven days a week?
  • In what order to you process? (ACH deposits, allotments, checks)
  • What order do you clear your checks (largest to smallest or first in / first out?)
  • What time are checks cleared?
  • When do you process your bill payments? (ours happen at the same time as we are doing ACH debits so transactions are jumbled with one another around 9 am every day)
  • Which transactions can cause an overdraft fee? ACH? POS? Checks? Bill payer? Loan allotments?
  • If your bill payer is not on your overdraft system what happens if there are not sufficient funds to pay a bill?
  • When are your VISA payments processed?
  • Are all VISA payments processed the same way? (our online banking payments go through a different system than those done in the branch or call center)
  • Does your POS overdraft system use available funds? If so, what happens when there is a hold that lowers the available funds?
  • What time of the day do you process overdraft fees?
  • What if a member visits a branch and brings their account current before you process fees? Are they still charged the fee?
  • Do POS transactions post at any time or do you batch them?
  • When do your incoming wires post?
  • When do your night drop deposits post?
  • When do your shared branching transactions post?
  • What other idiosyncrasies does your system have? (ask your front line, I bet they can tell you)

Good luck!

Shari Storm is Senior Vice President and Chief Marketing Officer of Verity Credit Union and is the author of the book “Motherhood is the New MBA”, available here:


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