While many financial institutions have let their overdraft privilege programs slip by the wayside after the implementation of Reg E in 2010, others have achieved success using fully disclosed, automated overdraft privilege programs. Good overdraft privilege programs provide your accountholders with stability and convenience while avoiding the embarrassment of a returned item. While not all overdraft privilege programs are the same, a specialized program that fits your financial institution provides a distinct consumer service that your accountholders value.
Here are five reasons why good overdraft privilege programs are still a valuable consumer service:
1. Provides Peace of Mind
The right overdraft privilege program provides accountholders with a financial safety net in difficult circumstances. Whether it’s an unexpected medical expense or an out-of-town emergency, these programs allow accountholders to be confident that their transaction will be approved, even if they don’t have the money in their checking accounts. This peace of mind helps create a loyal accountholder relationship with your financial institution.
2. Saves Money
Overdraft privilege programs preserve an accountholder’s credit rating by covering a payment that would normally bounce if the accountholder did not opt-in to the overdraft privilege program. This prevents them from being vulnerable to high interest rates in the future. Additionally, accountholders avoid compound penalty fees from both their financial institution and the merchant.
3. Saves Time
Accountholders may not have the time to deal with returned items, especially if it’s in the case of an emergency. Through a disclosed overdraft privilege program, your financial institution provides your accountholders relief by covering their transactions. Accountholders are not forced to return to a store to make good on a returned item or to take the time to go to another source to obtain the cash they need.
4. Saves Embarrassment
Not only is a declined transaction a hassle for accountholders, it’s also humiliating. By helping accountholders retain “good customers” status with merchants, you not only prevent embarrassing situations, you also establish your institution as a committed financial partner.
5. Provides Convenience
There is no charge for accountholders to opt-in to an overdraft privilege program. They only pay a fee if they use the service. Accountholders are free to opt-out at any point if they no longer wish to be enrolled in the program. With an automated, fully disclosed overdraft privilege program such as Pinnacle’s, we encourage financial institutions to keep in constant communication with accountholders and provide information so that they are knowledgeable about their finances.
While it has been nearly four years since financial institutions have been required to have accountholders opt-in to overdraft privilege programs for access to debit, point of sale (POS) and ATM coverage, the service is still needed as much today as it has ever been in the past.
By providing your accountholders with the right information on how your overdraft privilege program can benefit them, your financial institution reaps the benefits of increased accountholders satisfaction, increased accountholder retention and long-term financial success of your institution.
Schedule a free overdraft privilege consultation and see how your financial institution can benefit from realigning your overdraft privilege program.