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Overdraft Privilege Myths Debunked

Posted by Jeff Harper, President, BSG Financial Group on Aug 16, 2016 11:59:28 AM

Most financial institutions acknowledge that overdraft fees represent a remarkable source of non-interest income. What may not be clear to some is the fact that overdraft privilege programs are more than just a source of revenue. 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. 

Consumer Financial Protection Bureau (CFPB) director Richard Cordray has said on many occasions that his agency is not looking to do away with overdraft services (but is instead leaning toward minor changes in how institutions manage the programs). As such, it doesn't appear overdraft programs are going away. 

So how should community institutions view overdraft privilege in the current environment?

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege

Is Your Third-Party Overdraft Provider a Partner or Just a Vendor?

Posted by Michele Rehm, Marketing Manager on Jun 8, 2016 11:19:01 AM

First of all, let us be clear: we do not think vendors are bad. Third-party vendors play a valuable role in most financial institutions’ everyday operations.

However, from our perspective, a vendor relationship and a partner relationship are not the same; and when it comes to your overdraft program, a vendor just won’t cut it.

Managing a service that generates such a large percentage of your institution's overall non-interest income requires a true partner to your company. This partner should work as an extension of your business understanding and anticipating your goals and needs.

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Topics: Overdraft Protection, Overdraft Provider, Provider Patnership

Coming Clean on Overdraft

Posted by Michele Rehm, Marketing Manager on Mar 23, 2016 7:00:00 AM

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.

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Topics: Overdraft Protection, Overdraft Compliance, published articles, FMS

Is Overdraft Privilege Dead?

Posted by Jeff Harper, President, BSG Financial Group on Feb 23, 2016 5:49:35 AM

You might answer, 'Yes’ if you saw the headline, "CFPB Urges Banks to Ditch Overdraft Accounts," from an American Banker article published Feb 3, 2016.

However, if you read the entire article, you found that The Consumer Financial Protection Bureau (CFPB) director Richard Cordray was merely asking financial institutions—in a letter he sent to the nation's 25 largest retail banks—to consider providing products for consumers who cannot obtain checking services, and to "lower the bar" when it comes to screening them for those products.

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege

CFPB encourages short-term liquidity options

Posted by W. Barrett Nichols, founder & CEO on Feb 4, 2016 11:46:33 AM
BSG Financial Group appreciates The Consumer Financial Protection Bureau (CFPB) Director Richard Cordray's February 3, 2016  letter to financial institutions regarding alternative products for their customers. We find the suggestions helpful and progressive for assisting customers of any institution who want a "non-traditional" way to manage their funds and avoid problems from fees, overdrafts and other challenges to their needed access to short-term liquidity. It truly is right on point with sound suggestions and something that every financial institution should work to achieve. It clearly states the letter is not in reference to any regulatory requirement, but "simply is a suggestion that I urge you to consider in serving your customers". 
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Topics: Overdraft Protection, CFPB, Underbanked, Checking Accounts, Short-Term Liquidity

BSG Financial Group to Host Webinar on The Opportunities of Offering a Discretionary Overdraft Program for Financial Institutions

Posted by Michele Rehm, Marketing Manager on Feb 2, 2016 10:55:11 AM

Session to advise banks and credit unions how to improve fee income & service with a compliant discretionary overdraft program.

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Topics: News, Company News, Courtesy Overdraft, Webinar, Overdraft Protection

Article Roundup: (Positive) Overdraft Protection News

Posted by Jeff Harper, President, BSG Financial Group on Jan 13, 2016 11:21:57 AM

We're not sure if it's a trend or merely a coincidence, but there have been quite a few articles in the trades recently that paint overdraft protection in a more positive light than usual. We think it is beneficial to share these articles that substantiate our belief that overdraft protection programs are, in fact, helpful to many consumers in meeting short-term liquidity needs. Further, the majority of consumers who access overdraft privileges do so as the result of an informed and conscious decision. 

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Topics: Overdraft, News, Courtesy Overdraft, Overdraft Protection

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