We compared processing of letter and symbol stimuli presented briefly in the right or left visual field, and either in isolation or surrounded by two flanking characters of the same category. The flankers could be arranged horizontally or vertically. Participants performed a two-alternative forced choice (2AFC) task with the isolated character or the central character in flanked displays as target. Alternatives in the 2AFC task were characters from the same category as the target that were not present in the display. We recorded EEG in order to investigate the timing of crowding effects (isolated vs. flanked conditions) and the hypothesized differential impact of crowding on letters and symbols. Behavioral results showed no significant difference between isolated letters and symbols, but significantly higher accuracy to flanked letters compared with flanked symbolsand the effect of stimulus type was significantly greater with horizontally aligned stimuli. Likewise, amplitude of the N170 and a following negativity (identified here as the N250) did not differ significantly when comparing isolated letters and symbols but did differ for flanked stimuli. Flanked letters showed significantly greater N170 and N250 amplitudes compared with flanked symbols. N170 and N250 amplitudes were also significantly greater for flanked vs. isolated letters whereas symbols showed a significant difference in the opposite direction for the N250. We conclude that the processing of compact strings of letters is optimized for skilled reading via changes in the mapping of visual features onto letter identities in multi-letter arrays in order to reduce the interfering effects of excessive crowding.