CU overdraft programs designed with members in mind

March 31, 2022

UW Credit Union President/CEO Paul Kundert testified before the House Financial Services Subcommittee on Consumer Protection and Financial Institutions Thursday for its hearing on overdraft programs. In advance of the hearing CUNA submitted its own letter for the record, in addition to a joint letter with the National Association of Federally Insured Credit Unions.

“Overdraft protection is a service that allows a consumer to purchase goods in situations where the payment exceeds the consumer’s available balance. In accordance with all relevant laws and regulations, a consumer has affirmatively opted-in to overdraft protection after receiving clear and conspicuous disclosures on the product and its costs,” the joint letter reads.

“Credit unions offer responsible overdraft protection programs as a convenience to members, and members choosing to opt-in often do so for the peace-of-mind these programs provide,” it adds. “While legislation limiting the availability of overdraft protection may be well intentioned, it remains critical for Congress to understand that hasty action usurping natural market trends would ultimately lead to less favorable outcomes for the consumers that use responsible overdraft programs.”

Kundert shared the evolution of UW Credit Union’s overdraft products in recent years, which includes opening fee-free accounts in 2018 and lowering remaining overdraft/NSF fees to $5 in 2021.

“When prices are fair, consumers benefit from access to the credit provided by overdraft programs,” he said. “Care should be taken in considering regulatory or legislative approaches that would reduce the availability of short-term consumer liquidity.”

Several committee members during the hearing noted the member-centric nature of credit union overdraft services.