Does your Financial Institution provide Overdraft Protection Options or an ODP program?
The definition of overdraft protection (ODP) is a credit arrangement under which a bank automatically extends a short-term loan to cover an amount that exceeds the checking account balance. This arrangement ensures the item is not returned or bounced due to non-sufficient funds (NSF).
For many consumers, an Overdraft Privilege Program can help them manage unexpected expenses. Novantas recently found that 66% of consumers in their study knew they had a low balance, but wanted the payment to go through anyway. Based on their study, the results point to short term funding as a high priority in the consumer agenda which means Financial Institutions should think about offering convenient low-cost credit alternatives. How does a Financial Institution offer an ODP program by promoting responsible use of the program? Community Bank Insight recently had an article, Use the right overdraft provider to do the right thing, that offers tips on compliant Overdraft Privilege Programs.
Offering a comprehensive ODP program can help a Financial Institution keep a competitive edge in their market. However, designing a plan that is compliant can be daunting. Please contact Peak Consulting LLC at firstname.lastname@example.org for information on ODP implementation. Peak can help with designing the program, training on the fields available on the system and automating the decision making process when items are presented within or outside the overdraft limit.