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What strategies should banks consider when working with consumers during this time?
The Office of Banking encourages banks to work with affected consumers and communities in addressing the impact and challenges resulting from COVID-19. Strategies to consider may include the following:
- Waiving certain fees, such as:
- Automated teller machine (ATM) fees for customers and non-customers,
- Overdraft fees,
- Late payment fees on credit cards and other loans, and
- Early withdrawal penalties on time deposits;
- Increasing ATM daily cash withdrawal limits;
- Easing restrictions on cashing out-of-state and non-customer checks;
- Increasing credit card limits for creditworthy borrowers; and
- Offering payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by COVID-19-related disruptions.
In evaluating strategies, banks should not assume undue risk and should be able to adequately monitor and track strategies in relation to the bank’s overall risk profile and capital position. Banks should also clearly communicate the terms of any such accommodations including when the deferred payments will be due.
The Office of Banking views prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk.