Overdraft Privilege Limit

Posted By: Bankwoman1

Overdraft Privilege Limit - 05/08/19 06:57 PM

We currently offer an Overdraft Privilege program on our consumer checking accounts. In our ODP disclosure we state the overdraft limit for each account (either $500 or $750) and we disclose that we can suspend, revoke or discontinue the service at any time without prior notice. What if we want to provide a lower ODP limit than what is stated in the disclosure? So, say we have a customer that we may not feel comfortable giving the full $500 but would like to start them out with a $100 limit? This is not mentioned in our disclosure - would you see a problem with us doing this? Should our disclosures be changed before doing this? It's something that just recently came up, so not something we do often. Thoughts?
Posted By: BrianC

Re: Overdraft Privilege Limit - 05/08/19 07:10 PM

As soon as you start assigning different limits, you have made a credit decision and open your program up to scrutiny from an ECOA perspective. Your overdraft policy should have specific objective, not subjective, criteria for not providing the limit. (e.g. customer has a Chexsystems record, recent bankruptcy, etc.)

As soon as we "go with a feeling" we open the door to providing lower limits to folks based on their neighborhood, skin color, etc. Be careful what path you choose.
Posted By: Bankwoman1

Re: Overdraft Privilege Limit - 05/08/19 07:21 PM

Thank you Brian. That makes perfect sense! I appreciate your help.