Reprinted with permission of the Financial Managers Society. Original publication date, March 22, 2016.
For the most part, it’s hard to find anybody outside of the banking industry with something nice to say about overdraft protection.
With the Consumer Financial Protection Bureau (CFPB) long beating the drum for some type of reform, most takes on the topic continue to run along the lines of a recent New York Times article focusing on consumers racking up big charges while banks laugh all the way to, well, themselves with a pile of big fees.
While few institutions will dispute the notion that overdraft does, in fact, represent a solid (if not spectacular) source of noninterest income in an environment where every such dollar matters, recent data suggests that the service offers as much of a benefit to the consumers who use it as it does to the institutions that provide it.