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Credit Unions Increased Overdraft Fees Revenue Q1 2018
It used to be that Credit Unions were the safe harbor for regular people. They had the small town feel of the banking industry. More personal service and a promise of reduced or eliminated fees. According to a Credit Union Journal report that isn’t so much the case anymore. In the first quarter of 2018 Credit Unions increased overdraft fees revenue by 6.6%. That is during a time when big banks have had a decrease in overdraft fees revenue of 1.3%.
Not As Bad As It Seems
According to the report it is not as bad as it seems. It is believed that the increase in revenue has been spurred on from people leaving the big banks. Not of their own volition though, they are being told to take a hike by the big banks.
The larger banks are shedding “unprofitable customers”. People that only have checking accounts do not drive enough revenue and they are telling them thanks but no thanks. Larger banks are looking for customers to have at least two services. These customers tend to end up at the credit unions. They also tend to be the people who overdraft their account since they don’t have a savings or credit card account for overdraft protection.
Other Interesting Facts
Some other interesting financial info that was in the article is that people seem to be hesitant with the current economy. Usually bank account balances are around 4% of the value of the stock market. Currently that percentage is over 13% which means more people are holding onto their money rather than put it into the stock market.
There are about 1.1 billion overdraft transactions per year. That number is staggering, especially when you consider that they come at $30-40 a pop.
Although it is believed that an increase of customers is leading to this spike in revenue for Credit Unions I still find it a little disheartening. I always believed credit unions were more for the people, by the people type of places. I would expect them to have lower overdraft fees which would make this a smaller part of their business. Hopefully the largest offenders get some of their money back with their yearly credit union dividend checks.
Hat Tip – Top Class Actions
Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.