In Defense of Overdraft Protection Programs

by Mercator Advisory Group 0

The ICBA has published a study that offers additional insights into how consumers view, and use, automated overdraft programs. In essence, the main findings include that most consumers who actively use overddraft programs understand them and see value in them. The automatic nature of these programs offer a high level of convenience to consumers who occasionaly miss an important payment, but not mentioned (at least in the Credit Union Times article) is the fact that not all debits are created equal. My rent and light bill payments are very important. My latte at the coffee shop? Not so much.

According to the ICBA study, most consumers, particularly those using overdraft services, are aware of alternative services to meet their payment needs, such as account transfers and lines of credit. Overdraft coverage is the most preferred option for consumers with four or more overdraft transactions in the past 12 months.

However, the more information gathered about how consumers use these programs should help to inform the Consumer Financial Protection Bureau as it begins its rule-writing process, a topic Mercator Advisory Group covered in our recent Note, Overdraft Fees: Between a Regulator and a Litigator.

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