Ally Bank has recently made headlines announcing that it would no longer charge its customers overdraft fees. Ally is a popular online bank that offers one type of checking account and overdraft fees only accounted for less than .07% of Ally’s revenue in 2020.  Ally Bank typically excludes consumers that use overdraft protection to begin with; of their 2.5 million banking clients, only about 1% have been subject to overdraft charges in the past.

When a financial institution decides to eliminate overdraft protection to their account holders, how does that really affect the consumer? First, if the account holder writes a check for more than they have in their checking account then that check gets declined (the check bounces) and sent back to the payee who tried to cash the check.  Once the check is returned, the account holder is charged an NSF fee and most likely charged a return fee from the payee or the merchant.  After a check is returned, the payee or merchant might try to re-deposit/re-present the check to see if the customer has the funds available.  If the account holder does not have the funds available then they are charged another fee.  Without overdraft protection these types of transactions can be very expensive because the consumer will have to pay an NSF fee, return fee and most likely re-presentment fee as well.  Also, the account holder will be inconvenienced because the check did not clear, meaning the payee has still not been paid.  Ultimately, the consumer will have to deal with the embarrassment of having their item returned.  Secondly, if an account holder doesn’t have overdraft protection on their account then that account holder is not allowed to have their debit card covered under an overdraft program.  Most consumers enjoy the convenience of having their debit card approved for a transaction that may overdraw their account rather than having those transactions declined.

After reviewing banks that are offering no overdraft fees accounts, Strunk has found that most of these banks are just setting up automatic transfer from another account or a line of credit to cover the overdraft items.  Also, if a bank is offering no overdraft fees there are some restrictions you may need to consider on the account.  Some of the restrictions to the account could be that the account doesn’t offer checks.  The bank may impose higher minimum balances or direct deposit requirements to reduce the occurrence of a transaction being declined, and if the account holder does not have the required daily balance or required monthly deposit amount then there is usually a monthly maintenance fee on the account. Strunk recommends that your organization consider all of these situations when evaluating an account type without overdraft protection.

ODP Manager requires you to update the software daily with the updated deposit information from your core processor but can it also help you manage information not included in your daily extract file?

Included in ODP Manager, you can choose to track your Fresh Start Loan repayment schedules within the hosted software. After completing your Fresh Start Repayment Plan assessment and approval process, you can enter the repayment schedule information directly in ODP Manager. The schedule can be used to populate your Fresh Start Loan agreement and will streamline generating the document for your customer to sign.

The repayment plan will automatically leverage Strunk’s Reminder feature to create reminders when each payment is due. This will help your Strunk software users remember to check your core system to see if the payments have been made as agreed. Once you’ve verified the payment receipt and entered the data, ODP Manager will show the payments made and the outstanding balance on the repayment plan.

Each repayment plan can be viewed individually for each account. All repayment schedules are also summarized in a list that can be exported to PDF or Excel for reporting purposes.

By using the repayment plan tracking feature, you may be able to make managing Fresh Start Loan payments easier and facilitate reporting. Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more.