University Credit Union, a non-profit financial cooperative serving the university community, announced that he was eliminating its overdraft fees, or the fees charged to consumers when a transaction drops their checking or savings account balance below $0.
“The overdraft protection fee is a controversial fee structure that has historically had a negative impact on financially vulnerable members,” said University Credit Union CEO David Tuyo. “As a not-for-profit financial cooperative, our priority is to provide all of our members with the financial benefits they need to succeed.”
University Credit Union is the latest financial institution to eliminate overdraft fees. Bank of America announced in January that it reduce overdraft feesand in December 2020, Capital One became the first bank in the top 10 and the sixth retail bank in the United States at eliminate overdraft fees.
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BANK OF AMERICA REDUCES OVERDISCOVERY FEES
University Credit Union says new policy will promote ‘economic inclusion’
The Consumer Financial Protection Bureau (CFPB) conducted a study in December, which showed that revenue from overdraft fees and insufficient funds (NSF) fees reached $15.47 billion in 2019. It also showed that about 9% of consumer accounts accounted for nearly 80 % of these revenues. The University Credit Union said this study highlights the economic disparity in the fee structure for some consumers who frequently see overdraft fees as their available balance drops to a negative balance.
“This is one more example of how UCU is leading the industry toward fairer treatment for all banking consumers and fostering greater economic inclusion for its members,” the credit union said.
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CAPITAL ONE ELIMINATES OVERDISCOVERY FEES, THE CFPB INVESTIGATES UNIVERSALLY TO END THESE “ABUSIVE” FEES
Regulators consider banning ‘abusive’ overdraft fees
The CFPB is becomes more and more critical overdraft charges, calling them “abusive”. The CFPB report showed that banks have become increasingly dependent on revenue from these fees.
“This welcome research illustrates yet again the need to put an end to abusive overdraft fees – especially as these fees are borne primarily by those who can least afford them,” Rachel Gittleman, head of financial services outreach for the Consumer Federation of America, said in December 2021.
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