Does overdraft protection have to be an all-or-nothing proposition?

A study by ACTON Market Intelligence found that more than half of customers (57%) would opt out of overdraft protection if given the choice today. That suggests banks and credit unions could take a big hit on fee revenue under new regulation requiring them to get customers' permission before enrolling them in overdraft protection. Bank of America is going beyond the new requirement; beginning July 1, it won't allow customers to overdraw their accounts on debit purchases whether they are enrolled in overdraft protection or not. 

But what if consumers could pick, or even set, the criteria for overdraft protection to kick in?

Obviously, no one wants to pay a $35 overdraft fee on the proverbial $5 cup of coffee. But a number of people might be willing to pay that sum to make sure a $500 credit card payment or $1500 mortgage check clears. Paying thirty-five bucks might be less painful than having a red flag on a their credit report. 

The criteria could be as simple as the size of a transaction. Customers could opt-in for overdraft protection only on transactions that are bigger than the overdraft fee itself - although this is such a no brainer in terms of customer service that you'd think banks would be offering it already. Or consumers could pick a minimum transaction size, say $100 or $500, for overdraft protection. Anything smaller would be declined if there were insufficient funds.

Another option would be to let consumers pick payees, such as a mortgage servicer or credit card issuer, for whom they'd want to have overdraft protection.

No doubt it would cost banks money to offer this kind of customization. But it might be more cost-effective than not offering it.