Sen. Elizabeth Warren Has Some Overdraft Questions for Credit Unions

“This lack of transparency and accountability is concerning, given the administration’s rollback of other regulations designed to help consumers,” they wrote.

The NCUA collected and published the data in Call Reports throughout 2024 for credit unions with at least $1 billion in assets, drawing criticism from credit union trade groups. It was the first and last year overdraft data was reported.

Scott Simpson, president/CEO of America’s Credit Unions, said the trade group respects the senators’ “commitment to working families,” which he said is shared by credit unions.

“Credit unions are the original consumer protectors, founded to safeguard the financial well-being of American families,” Simpson said. “Their overdraft programs are responsible, fully transparent and designed to help hardworking members bridge short-term gaps without being pulled into predatory payday lending.”

Simpson said credit unions “look forward to working with them so they understand the benefits of these programs and ensure consumers continue to have access to safe, affordable options that put people over profits.”

Jason Stverak, chief advocacy officer for the Defense Credit Union Council, said overdraft fee restrictions that are too heavy will push some members to predatory lenders.

“Credit union overdraft protection is voluntary, transparent, and often lifesaving for military families and working households,” Stverak said. “Credit unions should not be tarred with the same brush as big banks.”

The letter also noted the Consumer Financial Protection Bureau’s repeal under Trump of its rule limiting most overdraft fees to $5.

“Overdraft and non-sufficient fund (NSF) fees are ‘one of the most common exploitative mechanisms big banks use to target the poor,’” the senators wrote. “The CFPB found nearly twice as many consumers with incomes between $35,001 and $65,000 were charged overdraft and NSF fees (35%), versus consumers with incomes between $100,001 and $175,000 (18%).

“Banks are not the only ones who charge overdraft fees; credit unions – despite being created to serve individuals of modest means – also collect significant overdraft and NSF fees,” they wrote.

The letter noted the repealed rule had required credit unions to disclose the terms of their overdraft loans, “just like they’re already required to do for other loans like credit cards.”

If the overdraft rule had taken effect, the senators said consumers would have saved up to $5 billion a year in overdraft fees, or $225 a year for each household that had been paying those fees.

“These fees are not necessary for a credit union’s survival,” they wrote. “One of the largest credit unions, Alliant Credit Union, eliminated overdraft fees and still had a record dividend payout to members in 2023, proving that credit unions can protect consumers without sacrificing their financial health.”

Among the 21 credit unions that received the most overdraft plus NSF fees in 2024, 15 were sent letters by the senators. Another six credit unions with smaller amounts were also sent letters.

NCUA data pulled from Callahan’s Peer Suite showed the 21 credit unions that collected the most overdraft plus NSF fees in 2024 received $1.47 billion, or 7% of their revenue.

The other 420 credit unions collecting overdraft or NSF fees collected $2.39 billion, or 5.4% of revenue.

The senators’ list of information sought is long, and included:

• “How much in overdraft and NSF fees has your credit union charged each of its customers, for each of the last five calendar years?”
• “How much does your credit union expect to collect in overdraft and NSF fees this year?”
• “Please provide a breakdown of your customers by income level who were charged overdraft and NSF fees for each of the last five calendar years.”