Negative Overdrafting (Courtesy Pay)
Negative Overdrafting is a great enhancement feature,
allowing members to periodically overdraw
their draft accounts up to certain prescribed limits.
The Negative Overdrafting enhancement is designed to dramatically increase a credit union's fee income through the expanded use of overdraft capabilities. It allows members in good standing to periodically overdraw their accounts up to certain prescribed limits. Members retain this privilege by bringing their accounts to a positive balance within an approved time limit.
With the Negative Overdrafting Enhancement, credit unions will notice:
- Increase fee income
- Increase loyalty and retention among existing members
- Enable cross-selling of higher-yield
- Attract new members
With Negative Overdrafting, members will be provided a discretionary service that will:
- Extend their cash base when they have made an honest mistake in their checkbook, experienced an emergency or just needed a little extra cash before payday
- Eliminate the need to pay merchant penalty feed for NSF checks (they only pay the credit union service fee)
- Avoid the embarrassment of having a check returned
- Help protect credit ratings
- Allow them to obtain funds quickly - without filling out loan forms
- Allow extra funds to be withdrawn from ATMs
How Does Negative Overdrafting Work?
With Negative Overdrafting, the credit union guarantees that money will be available to cover a share withdrawal or draft if the account goes below the available balance.
For example, an account that has an available balance of $100 with a negative overdraft limit of $400 that incurs a $5 (credit union defined) for each negative overdraft. If the member wants to make a cash withdrawal of $250, the system will let the account balance go to a negative amount and allow the member to withdraw the $250. The member account balance will then be reported as -$155 ($150 overdraft funds plus the $5 credit union defined fee).
With this enhancement, credit unions can set up several negative overdraft limits that are tied to separate fees. A limit can then be applied to each share account that the credit union wants to grant negative overdrafting privileges.
Product Prerequisites
- Must have Core Galaxy
For More Information
Contact your Fiserv Galaxy Account Executive to obtain more information and pricing on Negative Overdrafting!
