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Is “courtesy pay” really a courtesy? As long as I have been in credit unions, conventional wisdom has said there are only two reasons to charge a fee: to cover the cost of the service, and to change the negative behavior of the member.

For full disclosure, I will state that at Main Street Financial Federal Credit Union, we do offer a courtesy pay product and have for more than five years. Over this five-year period, we have seen increasing use of it and, of course, a corresponding increase in income. But we’ve also seen an increase in the amount of negative share draft accounts charged off. The arguments supporting courtesy pay are that members’ usage shows their need for this product and that the loss of income, if restricted, would be detrimental to the safety and soundness of the credit unions offering it.

Peter Westerman


Credit Union Times

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