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Andy Smith

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Is a Fixed Overdraft Limit-Setting Strategy Too Aggressive?

Posted by Andy Smith on Jul 31, 2018 9:02:47 AM

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Has this ever happened to you? An account holder, let's call him Dave Smith, has opened a checking/share draft account at your financial institution. After 30 days of consistent deposit activity, minimum balance requirement and no overdrafts, he qualifies for your institution's discretionary overdraft program.

You give Mr. Smith an overdraft limit of $500—the same limit you assign to every other customer who opens this type of account and qualifies for the service. Mr. Smith can now access your institution's overdraft service (at your discretion) up to the fixed limit of $500. 

Fast forward several months only to see Mr. Smith's name on a monthly charge-off report; and you wonder...where did Mr. Smith go wrong?

Or was it us?

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Topics: Fixed Overdraft Limits, Overdraft Compliance, Dynamic Overdraft Limits