Overdraft Fees Now in CU Call Reports Reveal Declining Trend
For the Top 10 credit unions, overdraft and NSF fees range from zero to 0.48% of average assets.
At some point, members are going to try to take out more money out of their share draft accounts than is in their balance.
How credit unions handle those unfortunate events can vary from mild to severe.
Now the NCUA is letting the public know how much credit unions collect for overdraft and non-sufficient funds (NSF) fees.
Following a practice adopted previously by the FDIC, the NCUA is reporting those fees separately for credit unions with more than $1 billion in assets. Based on Dec. 31 balances, that would be 438 credit unions that represent 76% of the movement’s assets and 72% of its members. They collectively collected $6.6 billion in total fees last year, accounting for 0.39% of their average assets, down from 0.41% in 2022.
Carrie Hunt, chief advocacy officer for America’s Credit Unions, said about 60 out of the approximately 400 reporting credit unions had no overdraft or NSF fees. She said the call reports show the variety among credit unions in how they handle overdrafts and NSFs.
“It’s all over the place,” Hunt said.
“Credit unions need to tailor their products and services to the needs of their members,” she said. “You can’t look at any fee in a vacuum.”
So how much of those fees were for overdraft and NSF fees?
CU Times has been keying in data from Call Reports since they started coming in the final days of April. For now, the CU Times analysis is limited to the 10 largest credit unions.
CU Times will provide the complete set when the NCUA posts the easier-to-crunch data tables for all credit unions early next month.
As for the Top 10 credit unions, the data showed overdraft and NSF fees can range from nothing to something.
Alliant Credit Union of Chicago ($20.1 billion in assets, 859,264 members as of March 31) stopped charging members for overdraft or NSF fees on all of its checking and savings accounts in August 2021. The credit union tends to have a wealthier membership. Their average shares were $18,181 on March 31, compared with an average of $12,860 for the Top 10.
Alliant’s total fees fell from $6.1 million, or 0.05% of average assets, in 2020, to $3.8 million (0.02%) in 2022. Last year they rose 43% to $5.5 million (0.03%).
On the something more side, there is the nation’s largest credit union: Navy Federal Credit Union of Vienna, Va. ($178 billion, 13.6 million members), where the average share balance is $11,154.
Navy Federal collected $77.8 million in overdraft fees and $91.8 million in NSF fees last year. The $169.6 million in overdraft and NSF fees were 0.39% of average assets in the first quarter. Its total fees were $207.8 million, up 15.6% from a year earlier. Overdraft and NSF fees were 82% of total fees.
In response to questions from CU Times, Navy Federal sent a statement saying its overdraft and non-sufficient fund fees made up 4.9% of its gross income in the first quarter.
“As the largest not-for-profit credit union, Navy Federal Credit Union is dedicated to reinvesting in its members,” it said. “The credit union offers competitive products, reduced interest rates and dividends, all while delivering exceptional member service.
“Guided by its commitment to serving the financial needs of 13.5 million military personnel, veterans, and their families, Navy Federal Credit Union provides voluntary overdraft protection services to assist members with short-term needs,” it said.
Navy Federal’s overdraft program limits fees to one per day. It charges no fees on transactions less than $5, and no fees if the negative balance is less than $15. It also tries to help members avoid fees altogether, including using auto-enrollment of members in low balance notifications.
Navy Federal also identified some of the other areas it does not charge fees:
- No balance transfer fees, or cash advance fees, or foreign transaction fees on credit cards and several credit card options with rewards programs but no annual fees.
- No application or origination fees on auto loans, personal expense loans and student loan.s
- No monthly service fees for most checking accounts.
The CFPB proposed a rule in January that would set overdraft fees at a maximum of $14 for the largest credit unions and banks – those with $10 billion in assets or more. That threshold applied to 21 of the nation’s 4,702 credit unions as of Dec. 31.
The National Consumer Law Center and other consumer groups support the rule generally, but specifically want to see the threshold lowered to $3.
The trade group America’s Credit Unions has opposed the rule, saying it could wind up hurting some members by limiting their options in times of trouble.
NCUA and FDIC data showed both banks and credit unions have been relying less on fees generally for about 20 years.
Hunt, of America’s Credit Unions, provided data showing the credit union fees as a percent of average assets rose from about 0.42% in 1991 to peak at about 0.87% in 2007, partly in response to the 1980s collapse of the savings-and-loan industry.
Hunt said regulators “were beating institutions over the head urging them to increase non-interest income to reduce exposure to interest rate risk. Then after the movement responded (with very short memories) regulators basically said – ‘do the opposite – reduce fees.’ This is a safety and soundness issue.”
Fees were 0.44% of average assets in 2023, the lowest since they were about 0.45% in 1992.
For the Top 10 credit unions, overdraft and non-sufficient fund fees were $232 million in the first quarter, or 0.22% of average assets. Their total fees were $367.4 million in the first quarter, up 11.5% from a year earlier. Overdraft (OD) and NSF fees were 63% of total fees. Besides Navy Federal and Alliant, the other eight were:
1. Mountain America Federal Credit Union of Salt Lake City ($19.3 billion, 1.2 million members), where OD and NSF fees were 0.48% of average assets in the first quarter. Its total fees were $41.4 million, up 19.7% from a year earlier. OD and NSF fees were 54% of total fees.
2. Suncoast Credit Union of Tampa, Fla. ($18.2 billion, 1.2 million members), where OD and NSF fees were 0.24% of average assets in the first quarter. Its total fees were $15.9 million, up 19.8% from a year earlier. OD and NSF fees were 68% of total fees.
3. America First Federal Credit Union of Riverdale, Utah ($20.3 billion, 1.4 million members), where OD and NSF fees were 0.21% of average assets in the first quarter. Its total fees were $24.5 million, down 30% from a year earlier. OD and NSF fees were 42% of total fees.
4. SchoolsFirst Federal Credit Union of Santa Ana, Calif. ($30.6 billion, 1.4 million members), where OD and NSF fees were 0.10% of average assets in the first quarter. Its total fees were $14.3 million, up 12.7% from a year earlier. OD and NSF fees were 53% of total fees.
5. Golden 1 Credit Union of Sacramento, Calif. ($20.5 billion, 1.1 million members), where OD and NSF fees were 0.05% of average assets in the first quarter. Its total fees were $7.3 million, down 30.5% from a year earlier. OD and NSF fees were 35% of total fees.
6. Pentagon Federal Credit Union of Tysons, Va. ($34.4 billion, 2.9 million members), where OD and NSF fees were 0.04% of average assets in the first quarter. Its total fees were $37.2 million, up 37.8% from a year earlier. OD and NSF fees were 8% of total fees.
7. State Employees’ Credit Union of Raleigh, N.C. ($55.9 billion, 2.8 million members), where OD and NSF fees were 0.03% of average assets in the first quarter. Its total fees were $10.3 million, up 13.3% from a year earlier. OD and NSF fees were 37% of total fees.
8. BECU of Tukwila, Wash. ($30.2 billion, 1.5 million members), where OD and NSF fees were 0.03% of average assets in the first quarter. Its total fees were $7.4 million, up 13.1% from a year earlier. OD and NSF fees were 27% of total fees.