By John Cohron, Chief Executive Officer, ADVANTAGE
Five ways to align with regulatory expectations – while continuing to deliver meaningful value to your account holders.
When consumer confidence plunges, community banks and credit unions face rising pressure to step up.
Inflation and trade policy uncertainty are squeezing household budgets, driving financial stress to levels few have seen in their lifetimes. In this environment, more consumers will seek flexible options that fit their needs. A thoughtfully designed overdraft service can help bridge short-term gaps by building trust and supporting long-term growth.
A key part of that design? Clear, disclosed overdraft limits that give consumers confidence and control. When your account holders know exactly how much support is available – and under what terms – they’re better equipped to make informed decisions, helping you deliver meaningful value while reducing risk.
💡 Watch the webinar: Overdraft Oversight: Navigating Overdrafts in a Post-CFPB Environment. Learn how to maintain exam readiness, support consumer needs, and protect long-term goals.
But how do you ensure your program meets consumer needs and withstands changes in regulatory expectations?
Here are five ways to strike the right balance:
With the CFPB’s overdraft rule repealed, some may feel less urgency – but overdraft practices remain a supervisory priority. Review your fee structures for clarity, consistency, and reasonableness. Are they aligned with the value your program provides and defensible during an exam?
Programs with disclosed limits and transparent fee practices are better positioned during regulatory reviews. They demonstrate proactive oversight and reduce the risk of scrutiny or consumer dissatisfaction.
Make sure program disclosures are clear, accessible, and easy to understand. Avoid legalese. Consumers should understand precisely how overdraft coverage works, especially when opting for extended coverage or selecting other service options.
When account holders fully understand their options – including the specific overdraft limit available to them – they’re more likely to see the value your institution provides and less likely to seek alternatives.
Overdraft services should be framed as a support tool – not a default solution. Clearly presenting them as one of several responsible options helps account holders navigate short-term gaps while reinforcing your institution’s commitment to transparency and supportive services.
Disclosed limits make that promise tangible, giving consumers clarity and control. This approach builds trust and aligns with examiner expectations for clear, consistent communication.
Monitor key performance indicators – usage patterns, fee trends, opt-in rates, and account holder feedback – to identify outliers and improve program performance. These insights also demonstrate that your institution is actively managing risk and consumer outcomes.
Data isn’t just for audits – it’s a strategic asset. With the right tools, you can make informed decisions, validate program design, and ensure your overdraft strategy aligns with examiner expectations.
Your frontline staff are often the first to explain (or defend) overdraft decisions. Equip them with clear, consistent messaging that emphasizes access, transparency, and support. A consistent message across channels helps reduce misunderstandings and reinforces your institution’s commitment to account holder satisfaction.
Educating your staff is one of the best ways to ensure consistency, reduce confusion, and build trust – especially when explaining how a program with disclosed limits works.
When your overdraft program is built on transparency and support, it becomes more than a service – it becomes a statement of values. Community financial institutions that embrace responsible practices now will be the ones account holders rely on tomorrow.
Connect with ADVANTAGE to learn more.