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What’s on Your Overdraft Program Checklist?
Monday, July 3, 2017 6:45 AM

Cheryl Lawson, EVP-Compliance Review, John M. Floyd and Associates

Lists are all the rage. Grocery lists, to-do lists, bucket lists, and more. On a larger scale, we use lists to define the must-haves for just about anything.  Love ‘em or hate ‘em, they work for many people. Proponents state that lists make them more organized, intentional, and successful―and list-making provides purpose and structure to help achieve a sought-after result.

As problem solvers in the financial services industry, we agree that having a checklist is always beneficial. Your credit union is bound by order, processes, regulations, and much more. Accordingly, a roadmap of actions can help you serve the needs of your members.  They’ll appreciate a logical approach, which can help them understand the value of your products and services. More importantly, it will strengthen your accountholder relationships.

The same can be said for a successful and fully disclosed overdraft program. By answering “yes” to these three items―and getting to “yes” for any that remain―your credit union’s program can contribute more to your initiatives’ success.

1.  Has complacency led to non-compliance?
A stagnant regulatory climate or a prolonged period of inactivity or indecisiveness can lead to lax practices and even abuse. Having an overdraft program with dynamic limits, or changing the transaction posting order, may be strategies you’ve considered. Unfortunately, they may not only potentially lead to excessive fees for members, but your credit union could be at greater risk for deceptive practices. Conversely, a fully disclosed approach protects against deception. Fees are established up front and are well communicated to avoid any confusion. Moreover, it discourages your accountholders from resorting to higher-priced or even unscrupulous or unregulated alternatives.

2.  Are members well informed and do they see value in the service?
If they have never used an overdraft service, they may not even know it exists. Awareness of the program, its accessibility, and convenience requires ongoing nurturing. Look no further than the countless studies on consumer behavior. Let’s face it, your accountholders often need a gentle reminder about the products and services you offer. By sharing information that speaks to availability, benefits, and fees in the most general, but fully informative terms, accountholders are educated so they can make well-informed decisions about their finances. A knowledgeable and helpful staff, combined with regular communication, breeds overall trust.

3.  Does your program take a short-sighted approach to revenue?
Simply raising your overdraft fee is not the solution. While this may lead to a spike in near-term performance, it is often accompanied by accountholder resentment or abandonment. Instead, offering a transparent, fully disclosed overdraft program at a reasonable rate can produce improvements in both revenue and member satisfaction.  Value in the form of reasonably priced, user-friendly products and services is the better solution.

When it comes to evaluating your credit union’s overdraft program, hopefully these must-haves will be on your checklist.

About John M. Floyd & Associates
JMFA is an endorsed business partner of Credit Union Resources, a wholly owned subsidiary of the Cornerstone Credit Union League.

For the past 36 years JMFA has been considered one of the most trusted names in the industry helping credit unions improve their performance and profitability. Whether it’s recovering lost revenue, uncovering savings opportunities, serving your members better, finding the perfect personnel fit or delivering a 100 percent compliant courtesy pay or overdraft program, JMFA has the right solutions to help you not only meet, but exceed, your goals. JMFA is proud to be a preferred provider among many industry groups, including CUNA Strategic Services. To learn more, please visit or call 800-809-2307.

About Cheryl Lawson
Cheryl has more than 30 years of experience in financial operations, consulting, communications, training, and project management. She joined JMFA in 2001 and currently serves as the compliance liaison for the company. She formerly served as EVP-Implementation for JMFA, leading and directing the consulting team. Cheryl has previously held positions with IBM and Chase Manhattan. Prior to joining JMFA, she was Managing Consultant for DACG, Inc. and is credited with saving approximately $10 million with the introduction of high efficiency technology strategies. Cheryl earned a Bachelor of Arts in English from Carnegie-Mellon University and an MBA from Rice University.