Service Charge income at banks and credit unions across the country is down around 20% for the first nine months of 2020 and there are several reasons why. First, many consumers received stimulus payments from the Federal Government in the second quarter to help spur the economy during the pandemic which has reduced overdraft fees. Second, FIs have increased waives and refunds of service charges to help their consumer checking accountholders. Lastly, debit card interchange has been lower as consumers are spending less during the Covid-19 crisis.
In many cases fee income from the SBA PPP loan program and mortgage originations have help offset the lower service charge income which has been a plus for community FIs. Now bankers will wait and see what losses they might face in their loan portfolio for small businesses that just can’t make it. Bankers are facing trying times and predicting how 2021 will play out is difficult.
Strunk’s Overdraft Privilege and Value Checking programs have been two of the best fee income producers our industry has ever seen. Financial institutions are doing budgeting for 2021 and now may be the time to explore how our programs have helped nearly one third of all banks in the U.S. Both Overdraft Privilege and Value Checking enhance customer service and increase fee income at the same time. Give your customers a choice on how they want their account handled and your bank will reap the benefits just like 1,800 banks across the country have.