1 CU Offers A Strategy For Opt-In On Overdraft

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WINSTON-SALEM, N.C.-With new regulations now in place, Truliant FCU here believes many credit unions would be wise to follow in its footsteps and promote opt-in overdraft protection.

"We have only done opt-in, we have never done traditional courtesy pay," said President/CEO Marcus Schaefer. "We are not one of these institutions that relies on overdraft fees to make money. We try to minimize fees to members and let them take those savings to build their financial futures."

Instead of standard courtesy pay, the $1.1-billion institution has offered a line of credit from $500 to $35,000 with no annual fee and variable interest to cover any overdrafts. It also provides a "second line of defense" in the form of "ChecProtect," which charges $29 per overdraft and gives members 15 days to repay the balance.

Though Truliant FCU has never been aggressive marketing its opt-in program in the past, according to Schaefer, that's changing a bit. The credit union now uses several banner ads at the top of its website with very direct and simple messaging. One implores members to not let point-of-sale debit card rejection happen to them. Another states that overdraft is a way the CU is looking out for them, while one newly-included message in the rotation simply asks members to "make sure they're covered" in light of the changes to the law.

The new regulations for overdraft protection programs have made life a little chaotic for the credit union and members alike. Schaefer said the timeline confused some members who were thinking of using the product, making them think they had to opt-in twice-once for the July 1 deadline for existing members and once after the Aug. 15 for new members. The new disclosures led to tens of thousands of phone calls from concerned members.

"Our contact center was swamped from people that thought they were delinquent on their credit card because some bureaucrat at the Fed demanded something on the statement that scares consumers into thinking they're delinquent when they haven't been delinquent," Schaefer explained.

Though he understands Washington's desire to protect the consumer, changes to overdraft and interchange fees will likely hurt the wallets of many the Fed and Congress were trying to help, Schaefer believes.

"There doesn't seem to be an end to the regulation that is going to be coming at us," said Schaefer. "These changes will have consequences for the consumer."

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