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Overdraft Programs a Significant Part of Non-Interest Income That Continues to Draw Controversy

Programs that seek to protect credit union members from the full impact of checks drawn on insufficient funds are both a significant source of non-interest income for CUs and the subject of continuing scrutiny.

By David Morrison | Updated on July 31, 2007

ARLINGTON, Va. — Programs that seek to protect credit union members from the full impact of checks drawn on insufficient funds are both a significant source of non-interest income for CUs and the subject of continuing scrutiny.

Critics of the programs charge they have become a profit-center for the financial institutions that deploy them and that banks and credit unions use practices that lead more of the depositors to need the programs. They further charge that the programs end up hurting low-income depositors more than helping them because depositors get trapped in a financial pit these programs help them dig.

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