To help customers avoid paying fees for small dollar overdrafts, MidWestOne Bank is rolling out an overdraft flex program.
Qualified individuals will now avoid a fee when they overdraft by $50 or less. All customers will not be charged for transactions of $5 or less that cause an account to overdraft, the maximum number of daily overdraft fees has been reduced from five to four and the $10 fee for transfers between deposit accounts to cover overdrafts has been eliminated.
“We are gunning to be one of the first financial institutions to develop a program that can eliminate overdraft fees,” said Greg Turner, executive vice president of wealth management and corporate communications at MidWestOne. “Fees for any financial institution are a part of the way they generate revenue, but for us, we felt like this was one area where we didn’t need to charge fees.”
“It’s simply because we believe it’s the right thing to do,” he added. “It doesn’t make financial sense for the bank but we just believe that this was one thing that we can do to help our customers.”
He estimates that the overdraft flex program will save almost $100,000 for customers that traditionally had overdraft fees, and will provide financial flexibility and reduce stress for customers.
MidWestOne Bank may be the first bank or credit union in Iowa to release such a product, said MidWestOne CEO Charlie Funk in an email.
According to a survey by the American Bankers Association last October,
one in four people say they have paid an overdraft fee within the last year; people across all income brackets are equally likely to have paid an overdraft in the past year; and post-grads are more likely to overdraw than those with a regular college degree or those without a college degree.
“No one likes an overdraft, including the bank, but sometimes it’s unavoidable,” said Mr. Funk in a statement. “Paying an overdraft fee on an amount under $50 is frustrating.” The overdraft flex program began May 2.
Headquartered in Iowa City, MidWestOne was named Best Small Bank in Iowa by Newsweek Magazine.