Many credit unions find themselves behind the curve when it comes to eliminating overdraft fees. Financial institutions – big and small – are offering consumers alternative accounts that use debit cards rather than checks and eliminate all overdrafts and the fees that accompany them.
"In some cases, overdraft fees are becoming the airline baggage fees of the credit union industry," CU Wallet CEO Paul Fiore said. "Sort of a clever way to maintain competitive pricing and then pad the books by dinging the customer every time they turn around. It's certainly one way to go, but I think as interchange continues to decline, credit unions will be better served by creating new digital revenue streams that don't dip into the pockets of their members, but instead leverage the wealth of data they're already sitting on."
Referring to overdraft fees, Money recently reported that credit unions no longer offer customers an advantage over banks. According to the article, the average credit union overdraft fee is $29 compared to the average $30 bank overdraft fee.
Recently, the CFPB asked financial institutions to offer a no overdraft alternative.
Following are eight credit unions and banks that have launched transaction products that don't overdraft.
ALTRA Federal Credit Union
ALTRA's My+ account doesn't have any overdraft fees because it doesn't offer checks, according to the $1.1 billion, Onalaska, Wis.-based credit union's website. Members access their accounts using debit cards, a mobile app, automatic payment deductions, wire transfers or online bill pay. There is no monthly service fee as long as 15 debit card transactions are made each month; otherwise, the fee is $4.95. There is no minimum balance or direct deposit requirement and e-statements are free. Members receive free transactions at ALTRA ATMs and three free transactions from other ATMs each month. Members also earn rewards for qualifying purchases.
BankMobile
BankMobile clearly markets itself to millennials, Gen Xers and underrepresented consumers. It has no branches and requires only one cent to open an account. In addition to no overdraft fees, there are no minimum balance requirement, direct deposit requirement, debit card transaction requirement, monthly fee or per check charges. Customers access their accounts using the surcharge-free STAR ATM network, a debit card, online or mobile banking, P2P, picture bill pay and remote deposit. Negative balances are repaid with a savings account or line of credit, and there is no fee to transfer those funds. BankMobile also doesn't charge a late payment fee on the line of credit. The FDIC-insured bank offers its app through Google Play or the iTunes App store.
Bank of America
There are no overdraft fees with Bank of America's SafeBalance Checking, nor are there any checks. Customers use a debit card, online bill pay or transfers from a mobile device or a computer to access the account. Bank of America charges a $4.95 per month maintenance fee. Charges are declined if a customer doesn't have enough money in his or her account to pay a bill. However, there still are times when a customer's charges could exceed the amount in the account. For instance, the bank said, a customer may charge a meal, have the payment authorized and then add a tip. In such cases, the customer still will not be charged an overdraft fee.
Citibank
As with most of these accounts, Citibank's Access Account has no checks and does not charge an overdraft fee. Customers use a debit card to access funds. They can avoid the account's $10 monthly service fee by having one qualifying direct deposit made to their account, paying one bill or maintaining a balance of at least $1,500 or more during the prior month. There is no charge to use a Citibank ATM, but a $2.50 per transaction fee for the use of other ATMs. Payments to third parties may be made using CitiPhone Banking or by using Citibank Online or Citi Mobile. Balances may be obtained using the bank's text messaging system.
First Bank and Trust
The $800 million, New Orleans-based First Bank and Trust's PaySound Checking Plan offers customers with a line of credit up to $1,000 without a credit check after the account has been open at least 96 days. With a credit check, customers may apply for a line of credit up to $5,000. The credit line carries a 15% APR and the bank also charges a $14.95 per month participation fee. However, the account also earns interest.
PaySound is a product offered by a software vendor that is marketed to mid-sized community financial institutions.
GoBank
The FDIC-insured Green Dot Bank's GoBank product is affiliated with Walmart and does not charge any overdraft, NSF or other penalty fees. Customers access account funds using a debit card, or online or mobile banking. The account also offers P2P payments. To make deposits, customers visit a Walmart store, swipe their debit card and deposit cash into their account. Customers may enroll by using an app or by visiting a Walmart store. There is an $8.95 fee charged each month, but the fee may be waived if monthly payroll or government direct deposits into the account total at least $500. GoBank accounts have no monthly minimum balance requirements. GoBank specifically markets its accounts to people who have been turned down for a checking account in the past.
KeyBank
The Cleveland-based KeyBank's Hassle-Free Account has no minimum balance, no monthly maintenance fees, no transaction fees, no overdraft fees and no checks. Customers access funds via a debit card, online bill pay, mobile banking, ATMs and automatic payment deductions. If a customer does not have sufficient funds in the account, transactions are declined or returned for non-sufficient funds without payment; however, KeyBank does not charge an overdraft or NSF fee. Customers may also participate in the bank's Relationship Rewards program that offers discounts for a $40 annual fee.
National Bank and Trust Company
NB&T Solo Checking offers customers a debit card, but no checks. There is a $50 opening deposit required, but there is no minimum balance requirement after that. Customers pay a $5.95 monthly fee. There is no monthly statement; instead customers monitor their accounts through the bank's mobile app and online banking. Customers may participate in the bank's Rewards program, which offers discounts on goods and services and the Change is Good program in which the bank rounds any transaction using the account's debit card to the nearest dollar and deposits the amount into the customer's savings account. NT&B is headquartered in Sycamore, Ill. and has total assets of $600 million.
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