800-809-2307
Four Letters. Infinite Potential.

Watch the Fees, Please

Don’t be complacent about the unintended consequences of raising fees

While there appears to be a great deal of hope for new opportunities and prosperity in the New Year, many banks and credit unions continue to be concerned about how to maintain robust revenue levels that ensure financial stability and allow them to maintain a competitive advantage in their market. However, due to the lack of new non-interest income sources, it can be tempting to rely on increasing fees to enhance the bottom line.

Regulators continue to focus on service charges and procedures that potentially harm consumers and limit their access to important financial services. Therefore, it is important to weigh the negative consequences of raising fees on valuable services – such as overdraft fees.

The benefit of increasing fees is temporary
While increasing overdraft fees can provide an initial boost in non-interest income, the elasticity of that income is very difficult to sustain – especially as your account holders determine that the cost exceeds the benefit of using your program. Most likely, it will instead lower your income – due to a decrease in program usage and a potential decline in volume.

The truth is, you don’t have to charge a lot to have an effective overdraft program. Providing a fully transparent overdraft solution – with reasonable fees and clear disclosures about the cost and terms of usage – can substantially increase your non-interest income because more account holders are aware of the program benefits and understand how to use it responsibly.

If they don’t need it, it doesn’t cost them anything. But if they have an emergency, they will appreciate that their financial institution stepped in to help them to get what they needed until their next deposit cleared.

Provide value and service to strengthen account holder loyalty

No one likes excessive fees. But consumers are willing to pay a reasonable charge for a reliable service that provides them with financial peace of mind when they have an occasional short-term need. If your fees are appropriate, and your processes and procedures are fully disclosed, more account holders will realize the value of the service you provide. The results? Better service for your account holders, as well as increased revenue and compliance peace of mind.


For more information about evaluating your overdraft program or any questions contact us.

 

account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders Advice Agreement Analytics announcement ATMs attracting talent Automation B2B Bank Bank of Pacific banking services banks batching Benefit best practices board governance board member board of directors bottom line branch equipment branch profitability branding Bryan Hanks budget business culture business environment business practices business processes business strategies career advice Case Study CEO onboarding CFPB change Charles Shanley Cher Cheryl Lawson Choose Chris Karstens Cloud Communication communications Competitive Compliance compliance examinations compliance risks compliant Consistent Consumer Consumer FInancial Protection Bureau consumer protection Consumers Contingency Contract contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts 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 Darin Byrd Data Deal debit card contracts Decisions Dick Miller digital directors economy Education efficiency studies election employee employee retention employees EMV migration evaluation Evolve executive search Expectations expense management expense reduction expense studies expenses Expert Federal Reserve Board fees financial services financial stability FinTech Floyd's Forum Free Analysis full disclosure Generating Income generating leads generation governance government hiring HR HR Consulting HR policies human capital human resources improved efficiencies improved results income income enhancement Innovate Innovative interview strategies interview tips IT contracts Jan Southern Jennifer Peoples Jim Griffis JMFA Academy JMFA clients JMFA News job search John M. Floyd Keith Hughey Kelly Flynn Kim Kreps leaders leadership Learning lending program Lesson Linda Meyer Literacy litigation loans Long Term Long-Term Maintenance management Mark Roe marketing measurable Members Midwest Region Millennial Millennials Missouri Mobile Banking NAFCU NCUA Negotiate negotiating contracts Net Operating Analysis NOA Non-Interest Income Oliver Ireland onboarding Organizational Health outsourcing Overdraft overdraft compliance overdraft coverage overdraft fees overdraft practices Overdraft Privilege overdraft program Overdraft programs overdraft protection programs overdraft service overdraft services overdraft strategy overdrafts Partner Paul McFarland payday loans Pennsylvania performance performance improvement personnel planning Press Release Privilege Manager CRM proactive