Dynamic vs. uniform overdraft limits

Answered by:

Question:

What is your opinion of having a set limit for courtesy OD coverage limits for all accounts versus having a dynamic OD coverage limits per account based on activity through an automated program.

Answer:

I lean towards having criteria. I’ve been in banks where everyone gets the same overdraft limit but; honestly, I don’t think everyone’s limit should be the same. I like the idea of telling a consumer, “We offer a cushion. If you want it, we will evaluate you and assign a limit. If you don’t want it, you don’t have to have it”. The criteria you use need to be standard and consistent, similar to how you might underwrite a loan.
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Learn more about Jerod Moyer’s webinar
Overdrafts – Current Developments