Banks’ liquidity management programs should offer a range of credit alternatives including BNPL and referrals to providers who can offer small-dollar short-term loans.įor a complimentary copy of the report, Beyond Overdraft: Helping Consumers Manage Liquidity, click here.Clyde Ross, photographed in November 2013 in his home in the North Lawndale neighborhood of Chicago, where he has lived for more than 50 years. Banks have scrambled to replace lost interchange from buy now, pay later (BNPL) purchases, but the bigger issue may be the erosion of the consumer relationship due to other providers offering credit at the consumer’s point of need. Provide a variety of credit alternatives.Software is available that can reduce usage of the overdraft service (and the associated fees) when fees exceed a given percentage of the consumer’s deposits. Charging $400 to a consumer who has $2,000 a month in deposits is not in the best interest of the consumer or the financial institution. Use tools to limit overdraft fees for low-income consumers. This policy is a consumer-friendly practice to prevent the “$30 fee for a $3 cup of coffee” headline scenario. Banks can provide this exception on a per-item basis or per-day basis.
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