RALEIGH, N.C.-Coastal FCU has instituted a one-cent overdraft fee for members that correct the problem before 11 p.m. the same day they overdraft or in cases where their account balances are not more than $10 in the red. Accounts that are more than $10 overdrawn after 11 p.m. will be charged the standard $28 fee.
Members who opt-in to the CU's overdraft program, called Bounce Guard Plus, will be covered for all transactions, while those who do not will only be eligible for check and ACH transactions. Marking Communications Manager Joe Mecca told Credit Union Journal the new policy is intended to be a permanent change.
"When we were preparing for our Reg. E compliance and working out what our program would look like, we pulled members into a couple of focus groups," Mecca explained. Mecca said the consensus of these light-to-heavy overdraft users was that members should be given the opportunity to correct mistakes and not be charged heavy penalties for small overdrafts.
After hearing from members, Coastal FCU's IT staff quickly wrote a program and plugged it into its core system, The marketing message from the $2-billion CFCU: "Are you positive or are you at least not more than $10 into the negative? If so, any overdraft fees that would have been charged, we have a program that kicks out the $28 and reduces it to a penny," said Mecca. "It encourages members to monitor their accounts."
In addition to simply providing better service and not penalizing trivial errors, Coastal is hopeful that the new policy will attract new checking accounts as well as encourage members to opt-in to Bounce Guard Plus.
"We know that we have about 16,000 members who in the past year have done two or more overdrafts. We'd like to see three quarters of that group opt-in," Mecca noted.
The credit union plans a multi-pronged approach in promoting the new service. Internally the CU will use digital signboards and employee buttons to remind members of the change, while ads will be placed on the CU's homepage and local web outlets to entice prospective members to bring their checking accounts to Coastal. The one-cent overdrafts generated considerable free publicity, including coverage by Associated Press and a full story in the local News & Observer.