House committee hearing discusses concerns around overdraft fees
The House Financial Services Subcommittee on Consumer Protection and Financial Institutions Thursday held a hearing on the rise of financial institutions’ elimination of overdraft fees. Of note, Paul Kundert, President and CEO of University of Wisconsin Credit Union (Madison, Wisc.) testified on behalf of his credit union and spoke on the changes that they had instituted to their overdraft program, which included capping fees at $5 and limiting the amount of fees that can be charged in a day. He also stated that customers at UW credit union generally did not react to their change in overdraft fees.
In addition, Representatives David Kustoff (R-Tenn.) and William Timmons ( R-S.C.) discussed regulatory concerns and highlighted a recent Morning Consult survey about the customer satisfaction with overdraft fees at their bank. The results of the survey revealed that 90% valued overdraft fees, and 72% who paid a fee in the last year were glad their bank paid the bill. The survey also found that 62% of respondents think overdraft fees are reasonable and only 21% say it is unreasonable.
Ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the committee sharing support for a fair, transparent, and competitive market for consumer financial services but cautioned legislative efforts to eliminate overdraft protection programs are likely to result in significant negative impacts on borrowers and credit unions.
In addition, NAFCU joined CUNA on a separate letter to the committee, expressing that hastily enforcing legislation to limit overdraft protection could disrupt members’ ability to utilize such programs to resolve short-term financial difficulties. The associations explained that credit unions offer fair programs coupled with initiatives to help financially distressed members and provide greater resources and investment in their communities.
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