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After enduring years of compressed net interest margins, credit unions leaned into non-interest income to maintain profitability. Debit and ATM transaction fees, overdrafts and nonsufficient funds (NSF) charges became particularly important, especially as account maintenance fees have lost popularity for competitive reasons and consumer disdain.
However, Washington has other plans. The CFPB announced a proposal late last month to eliminate so-called "junk fees," including overdraft and transaction fees declined at the point of sale. Additionally, Capitol Hill has legislation before it – again – to reduce interchange fees. Should these come to pass, they will have a substantive impact on non-interest income (NII) streams that credit unions routinely depend on.
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