How can credit unions become the ultimate “ally” when it comes to overdraft protection?

Most of us have experienced at one time or another that awful feeling when you realize you have either bounced a check or are about to.  And most credit unions have “been there” for the member with a courtesy pay feature that tacks an average fee ranging between $27 and $30 on at the end (per item).

Turns out, not so courteous. And financial institutions are beginning to see the light. In June 2021, Ally Bank announced they were eliminating overdraft fees for all their customers. “This is a significant advancement for consumers as we live out our mission — being a true ally,” said Ally CEO Jeffrey Brown. “Overdraft fees are a pain point for many consumers but are particularly onerous for some. It’s time to end them.”

Mr. Brown is correct. If a member finds themselves at a period in their lives where they are in a financially unhealthy position, such irritating and consequential charges do nothing but cause further distress and financial instability rather than “teaching them a lesson.”

While most courtesy pay fees average $27.30, at credit unions, we can boast they are still less than overdraft protection programs at banks, which average around $35.

 

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