Even Credit Unions Are in on Banks’ Junk Fee Racket
The credit union motto is “people helping people.” Yet credit unions, like big banks, collect billions of dollars through excessive overdraft fees — and the Trump administration just made it easier for them to do so.
Navy Federal Credit Union collected more than $724 million in overdraft and nonsufficient fund fees last year, more than any other credit union. (Aaron F. Stone / Flickr / This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license)
Federal credit unions are often seen as the kinder, gentler version of big banks, since they are designed to serve members of modest means without a profit motive. But data from a new reporting rule we reviewed found that the largest credit unions made nearly $4 billion charging their members unnecessary overdraft fees last year.
Now, following industry lobbying on the issue, President Donald Trump’s top credit union regulator has revoked the junk-fee reporting rule, meaning credit unions will have more leeway to hide how they bilk consumers than the corporate banks to which they’re supposed to serve as an alternative.
The decision to hide credit unions’ junk-fee revenue preceded a March 27 Senate vote to overturn a government rule that cut the fees large banks and credit unions could charge consumers for spending more than they had in their accounts. The rule, finalized in December, capped the fee at $5, down from an average of $35 per overdraft.
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