Non-interest income can keep a credit union afloat in times of economic decline. Credit unions must always be looking for ways to drive non-interest revenue to help maintain positive expense-to-income ratios. In order to drive this income forward CUs should better product offerings, and improving your portfolio of debit card services can help. Offering advanced card maintenance options for member's debit and credit cards is one way to do this. Here are 3 secrets to boost non-interest income specifically through debit cards:
1. Overdraft Privilege. Provide members with flexibility by offering overdraft protection. This allows an account to go negative and saves members an embarrassing realization while shopping for groceries. Make members aware that each transaction taking the account negative merits an overdraft fee. Additionally, train MSRs to educate members on how to effectively use this privilege. Rather than swiping their card at three different stores and racking up $60 dollars in fees, withdraw the extra money needed to cover multiple costs in cash and only receive one fee. If members are properly educated, this privilege will keep them loyal to your brand while still generating non-interest income for your credit union. Also, be forgiving. Waiving fees for accidental use of the overdraft privilege can be a great time to build member loyalty.
2. Verify What Services Qualify for Overdraft. Providing members with overdraft protection over not only debit card transactions, but also ACH debits, checks, point of sale purchases and ACH origination saves the member headaches while also creating income for the credit union. When the policy put in place is designed to protect the member rather than penalize them, members remain loyal and appreciate the wiggle room. This additional protection saves members from embarrassment, merchant returned charges, and late fees, which can be the solution to ensure members aren't leaving your credit union.
3. Reward Checking. Loyal customers have a direct correlation to potential higher revenue for a credit union, and offering a reward checking program is they key to keeping members loyal. Reward checking entices members by paying a higher yield based on member level participation. Members can qualify for increased dividend rates, loan discounts, cash back, gift cards or miscellaneous fee refunds. This may sound like losing non-interest income, but members are not the only ones reaping the benefits of reward checking. Reward checking drives greater member integration with your member services, resulting in an increased "average member relationship" and likely your CU becoming the member's primary financial institution. Also, debit card transactions generate additional fee revenue. According to the article The Credit Union Rewards of Offering Debit Cards Rewards, millennials in particular love rewards programs.