Money
America’s Credit Unions defended credit union overdraft practices in a letter to the Democratic senators who are seeking detailed information on those fees from 21 credit unions.
The four-page letter sent Wednesday by AmCU President/CEO Scott Simpson starts by trying to shift terms from overdraft fees to “Courtesy Pay” fees.
“These programs give members a safety net when they accidentally or unexpectedly spend more than they have in their accounts,” Simpson wrote. “Instead of facing costly returned-check fees, missed bill payments, or the embarrassment of a declined transaction at the checkout line, members can rely on Courtesy Pay to keep essential purchases, like groceries or gas, on track.”
“Ultimately, an overdraft fee is a fully disclosed, opt-in fee for service program where the consumer has a choice on whether or not to use the service and pay the fee,” he wrote.
Monday’s letter was from Sen. Elizabeth Warren (D-Mass.), the ranking Democrat on the Senate Banking committee, along with Sens. Cory Booker (D-N.J.) and Richard Blumenthal (D-Conn.)
The senators wrote to 21 credit unions seeking detailed information on their overdraft and non-sufficient fund fees.
"Banks are not the only ones who charge overdraft fees,” the senators wrote. “Credit unions - despite being created to serve individuals of modest means - also collect significant overdraft and NSF fees.”
The senators reached out to 21 credit unions with assets ranging from $1.5 billion to $194 billion as of September, and overdraft and NSF fees in 2024 in a range from $8 million to $725 million, which was collected by Navy Federal Credit Union of Vienna, Va. ($194.2 billion in assets, 15 million members).
As a group, the 21 held 25% of assets among the 451 credit unions meeting the NCUA’s $1 billion threshold for reporting overdraft and NSF fees, and collected 36% of those fees.
The Center for Responsible Lending in Durham, N.C., the policy arm of the Self-Help credit unions, sent a statement to CU Times saying Sen. Warren’s queries come at a time when banks and credit unions should revise their overdraft policies to make the fees less burdensome.
“We are in the midst of a national affordability crisis with too many families struggling to afford basic necessities like food, gas and housing,” CRL President Mike Calhoun said. “Charging excessive overdraft fees in this moment is a bad look for both banks and credit unions who are supposed to have consumers’ best interests at heart.”
“This profiteering is indefensible,” Calhoun said. “In this moment, depositories have a chance to show that they understand the challenges that their consumers are facing and build trust in their institutions by helping customers and members advance financially by either eliminating overdraft fees or strongly limiting the size and frequency of these fees.”
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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