A new report from the National Association of Federal Credit Unions shows banks and credit unions have wide variances in overdraft policies can be a useful tool for financial institutions.
The Consumer Financial Protection Board released its white paper on Tuesday, which uncovered staggering differences in overdraft policies for credit unions and banks across the country. The CFPB said its findings indicate that customers who opt-in for overdraft protection service with their bank or credit union are likely to pay more compared to customers who choose not to provide permission to their financial institutions for overdraft coverage.
The report found that overdraft fees represent 61 percent of the fee revenue generated by consumer checking accounts. It also revealed that overdraft and “nonsufficient funds” fees made up 37 percent of total deposit service charges.
Carrie Hunt, the NAFCU’s general counsel and vice president of regulatory affairs, said the report could be used by credit unions to evaluate the way overdraft products affect their membership.
“The report doesn’t preclude credit unions from offering overdraft coverage or offer any recommendations on future rulemaking, but NAFCU will continue to work to protect credit unions’ ability to best serve the needs of their members,” Hunt said.