800-809-2307
Four Letters. Infinite Potential.
Does Your Overdraft Program Place Value Above Fees?

Does Your Overdraft Program Place Value Above Fees?

By Richard Miller, Executive Vice President

In the past few years, big banks have made it increasingly difficult for Americans to keep a basic free checking account. Consider the following:

Institutions like Bank of America announced more requirements to waive their monthly maintenance fee.
Over the past five years, bank fees have increased across the board: Monthly maintenance fees are up eight percent, overdraft fees are up 9.4 percent  and ATM fees are up 10.7 percent.
Less than 30 percent of all checking accounts are now “free,” with that number on the decline.

This presents an opportunity for your bank or credit union to shine. By evaluating all fees—including your overdraft fee—and focusing on serving your account holders in a responsible, informative way, you will experience an increase in business and account holder satisfaction.

Protecting income and delivering better service continue to be primary focuses for just about every bank or credit union. The structure of your overdraft program can make all the difference, especially if account holders see the value of the service. Here are three points to ponder: 

Do you have a fully disclosed overdraft program? 
When changes to Regulation E were implemented back in 2010, banks and credit unions were required to obtain an affirmative opt-in from account holders to charge overdraft fees on debit card point-of-sale and ATM transactions. Educating your account holders about this service goes much more smoothly with a fully disclosed overdraft program.

Are you aware of your real competition?
Your competition is not necessarily other financial institutions in your area. Rather, your competition is what your account holders are using instead of your services to meet their needs. If you charge a reasonable fee that is equal to or less than a car loan late charge or a credit card late fee — and that helps account holders avoid a negative impact to their credit score — they’ll choose your solution. By having a fully disclosed overdraft program that provides account holders with a clear understanding of limits and fees, you can differentiate your bank or credit union from any and all competitive options.

Are your fees reasonable for the service provided?

Account holders will appreciate a value-added service with a reasonable fee that is disclosed at the outset. But they will likely avoid a service with excessive or undisclosed fees. In the end, it always come back to the importance of looking at your services and fees from the perspective of your account holders. Doing so demonstrates your commitment to providing disclosed value above fees. It also helps to avoid dissatisfaction and disloyalty among account holders and undue pressure for employees to explain the unexplainable.



ABOUT JOHN M. FLOYD & ASSOCIATES (JMFA)
For the past 38 years JMFA has been considered one of the most trusted names in the industry helping community banks and credit unions improve their performance and profitability. Whether it’s recovering lost revenue, uncovering savings opportunities, serving your account holders better, finding the perfect personnel fit or delivering a 100% compliant overdraft program, JMFA has the right solutions to help you not only meet, but exceed, your goals. We are proud to be a preferred provider among many industry groups. To learn more, contact your local representative or call us at (800) 809-2307.



 

2020 40 years Academy account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders Advice Agreement analysis Analytics announcement Assistance ATMs Attendees attracting talent Automation B2B Balance Bank Bank of Pacific Banking banking services banks banks and credit unions batching Benefit best practices board governance board member board of directors bottom line branch equipment branch profitability branding Bryan Hanks budget bundling business business culture business environment business practices business processes business strategies career advice case studies Case Study CEO onboarding CFPB change Charles Shanley Cher Cheryl Lawson Choose Chris Karstens Classroom clients Cloud Cohron commitment Communication communications Competitive Complaint Compliance compliance examinations compliance risks compliant Consistency Consistent consultant consulting Consumer Consumer FInancial Protection Bureau consumer protection Consumers Contingency Contract Contract Analysis Contract Negotiation contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts Convenience core processor contracts Cornerstone Credit Union League corporate culture corporate governance CPE credits credit card contracts credit cards Credit Union credit unions Crissandra Fry CSS culture customer service cyber security Damian Darin Byrd Data database Deal debit card contracts Debt Decisions Dick Miller digital directors Disclosed discounts Discussion Dynamic economy Education efficiency studies election Emergency employee employee retention employees EMV migration evaluation Evolve executive search Expectations Expense expense management expense reduction expense studies expenses Experience Expert expert negotiations Experts Facilitators FastTrack Federal Reserve Board Feedback fees Financial Financial Institution financial institutions financial services financial stability FinTech Floyd's Forum Free Analysis full disclosure Fully Generating Income generating leads generation governance government Halloween Hammond hiring HKW Holiday Holidays HR HR Consulting HR policies Hubur human capital human resources Implementation improved efficiencies improved results Inc. income income enhancement Innovate Innovative interview strategies interview tips IT contracts Jai James Jan Southern Jennifer Peoples Jim Griffis JMFA JMFA Academy JMFA clients JMFA News JMFA Next Generation Overdraft Privilege job search John M. Floyd John M. Floyd & Associates Keith Hughey Kelly Flynn Kennedy Kim Kreps Lawyer