Fee Elimination, Reductions Go Into Effect Nov. 1 at Two Large CUs

In the past four months, at least six credit unions have removed or reduced overdraft and non-sufficient funds (NSF) fees for members. On Monday, a credit union in Wisconsin announced it had eliminated all fees, while another credit union in New York said it was drastically reducing its overdraft fee structure.

The $2.6 billion CoVantage Credit Union (138,194 members) in Antigo, Wis., said beginning Nov. 1, the credit union would no longer charge overdraft fees of any kind.

Previously, members were charged between $2 and $25 per overdraft or non-sufficient fund occurrence. According to a statement from CoVantage, all “members with a CoVantage checking account will receive the additional benefit of having entirely fee-free checking with no worrisome overdraft fees, and there is no need to apply or request this enhancement.”

CoVantage EVP Brett Lee said, “We believe removing overdraft and NSF fees will reduce stress and anxiety for members when they carry low balances on their checking account. It will allow them to keep more of their hard-earned money instead of being penalized every time an unfortunate overdraft occurs.”

In Rochester, N.Y., ESL Federal Credit Union ($8.6 billion in assets, 398,193 members) announced Monday that it had reduced its overdraft fees from $25 to $5 per occurrence for individual and business members.

“At ESL, our purpose is to help our community thrive and prosper. In that context, we continually evaluate our practices and have come to understand that overdraft fees most often impact the people who can least afford them,” Faheem Masood, ESL’s president/CEO, said. “While account balancing mistakes happen, fees should not be driving people into further financial strife when they already had insufficient funds in their accounts. We are committed to taking actions in support of our purpose and believe this overdraft fee reduction to five dollars sets a new standard for what consumers should expect to pay.”

As far as any negative revenue impact from the fee reduction, a spokesperson for ESL said in an email the credit union expects “more than $13 million in revenue will be returned to members through the end of 2023 with this fee reduction.”

ESL Vice President/Director, Product Development and Management Caytie Bowser said, “We regularly analyze and evaluate how ESL can help improve their financial health, and from our analyses, we know that there are members who are incurring these fees routinely. With this significant reduction, action has been taken that puts our members’ needs and financial well-being first.”

According to Lee at CoVantage, “This decision to eliminate all overdraft fees, NSF fees, courtesy pay fees and savings transfer fees will further allow us to pass an additional $2.5 million in value to the majority of our 140,000 member-owners.”

Lee added, “As a mission-driven credit union, CoVantage has always taken great pride in having lower fees than the industry averages, and this change will truly make our checking accounts completely free of fees. We are excited to be one of a very small group of financial institutions across the country to eliminate overdraft fees,” Lee said.

Since July, other credit unions in Iowa, Wisconsin, Illinois, Florida, Oklahoma and New Mexico have eliminated or reduced their overdraft or NSF fees.