Virginia CU Plans to Eliminate OD/NSF Fees in Second Quarter
United States Senate FCU also expects to launch new solutions to support members who overdraw their accounts.
The $1.2 billion United States Senate Federal Credit Union announced Thursday that it plans to eliminate overdraft and NSF fees during the second quarter, and it will also launch a new solution to support those who overdraw their accounts.
The Alexandria, Va.-based credit union joined a growing number of financial cooperatives across the nation that have been dropping these fees.
During a year-end strategic planning session last September, USSFCU said its leadership and board of directors unanimously agreed that members should no longer pay these fees.
“At USSFCU, we have always been about what is best for our members, and we never want to lose sight of that. At the end of the day, it was an easy decision.” USSFCU President/CEO Timothy L. Anderson said. “If one of our members is struggling to keep their head above water financially, we want to be a solution to help and not add to their burden.”
USSFCU serves nearly 50,000 members.
With digital efficiencies being experienced by both credit unions and members today, research has shown that overdraft and NSF fees, to a wide degree, disproportionately impact Black and Hispanic consumers.
“Credit unions, with their reputation for serving consumers of modest means, may be unwittingly compounding the financial struggles of already vulnerable members via their ODP programs,” according to an August 2022 report, “Updating Overdraft Protection to Meet Member Needs,” by the Madison, Wis.-based Filene Research Institute.
The disparity Filene’s report referred to was reflected in the data of a number of credit unions around the country that charged overdraft and NSF fees. In 2020, and especially in 2021, more than 25 credit unions decided to drop or reduce those fees after realizing they were placing more financial burdens on members who were already struggling financially.
This trend of dropping or reducing fees has continued through 2022, and it is expected to keep growing this year and beyond.
“USSFCU has always been driven by that old credit union motto of ‘people helping people.’ That’s not going to change,” Anderson said. “Not only will we eliminate NSF/overdraft fees, we are also providing a ‘safety net’ of sorts for those members who dip into the negative.”
The credit union said more details will be provided in the coming months on its new solution to support those who overdraw their accounts.