Moebs said he believes CUs could benefit from lowering their overdraft transaction prices. Especially as large banks eliminate their free checking products, credit unions could win checking account holders by offering a lower overdraft transaction price, he said. He added that doing so would even put them up against a competitor they may have never considered–the payday lender.

“This is an opportunity for credit unions to gain market share on checking accounts and substantially increase their revenue through overdrafts,” Moebs said. “With the Wall Street banks shedding their free checking, this is an ideal opportunity for credit unions to say, 'I've got a lower price.'”

The small increase seen in the percentage of credit unions offering all four types of overdrafts also leaves room for improvement, Moebs said. “Out of the credit unions with a checking account, only 47% offer all types of overdrafts,” he said. “That's a huge loss of revenue.”

The study also found that the number of credit unions offering savings account transfer and line of credit overdraft protection services has fallen since Reg E.  About 80% of CUs offered savings account transfer overdraft protection services in 2010, while 64% do today; around 55% of CUs provided line of credit overdraft protection services in 2010 and just 37% do so in 2011.

Overdraft protection services data for all financial institutions also shows a decline–in 2009, 81% of credit unions and banks offered an automatic transfer from a savings account and 70% do today; those offering a line of credit protection service fell from 63% in 2009 to 49% in 2011.

Another significant finding of the Moebs Services study is that consumers are using overdrafts at a more rapid rate. Since Reg E, more than 77% of consumers in the U.S. chose to allow for debit card and ATM overdrafts, which Moebs pointed out is more than 100 million checking account consumers.

“What many regulators do not understand is that Reg E as introduced by the Federal Reserve in 2009 and implemented in 2010 has changed consumer behavior to regard overdrafts as safety nets and no longer as a penalty,” Moebs said. “Because of the added federal scrutiny, banks are unable to provide a safety net to their consumers with overdrafts and are therefore cutting the regulatory burden by cutting services.”

Moebs Services' high opt-in numbers didn't surprise Filene Research Institute Research Director Ben Rogers. According to Filene, 11% of credit union members were repeat overdraft users in 2009; Rogers said those heavy users were likely to opt in because overdraft had become a standard part of their lives, and the other 89% were also likely to opt in because the safety net idea appealed to them.

The data “confirm what a lot of managers already knew–that members, especially heavy overdraft users, were treating overdraft as a day-to-day money management tool,” Rogers said. “Most of the credit unions I've spoken to have been proactive about promoting the service and getting members to opt in. That marketing push, coupled with the fact that most members are more likely to change their hair color than their long-term money management habits, made the switch a lot more automatic than most had assumed it would be.”

The $680 million, Plymouth, Minn.-based TruStone Financial Federal Credit Union said since Reg E, the opt-in rate for the CU's debit card and ATM overdraft service (called Privilege Pay PLUS), is at around 15%.

However, the opt-in rate for its “regular users” (those who use debit card and ATM overdrafts more than five times per year) is at about 90%. The credit union has also seen an expected slight decline in overdraft fee revenue since Reg E. TruStone Financial FCU offers savings account transfer and line of credit overdraft protection services, and its overdraft price is $30.

TruStone Operations Manager Lorri Kulberg said the CU's biggest hurdle during the Reg E opt-in process has been getting members to respond to the standard overdraft communication set forth by the Federal Reserve, which did not include terms they are used to hearing such as “ODP” and “Privilege Pay.”

“Some are thinking we are trying to be sneaky and aren't sure what to do,” Kulberg said. “And, as is human nature, when people don't know what to do, they do nothing. Lastly, we are finding that some people disregard the letter because they think they have already opted in.”

The CU later distributed supplementary overdraft communication, which brought its total opt-in percentage from 11% to 15%, and that number continues to increase, the CU said.