ALEXANDRIA, Va. (Jan. 16, 2025) – The National Credit Union Administration today released a Research Note that provides an analysis of statistics for overdraft and non-sufficient funds fees, and observations on the relationship between overdraft and non-sufficient funds fees and other revenues.
“This Research Note provides important information for consumers, researchers, credit unions, and regulators about the use of overdraft and NSF fees at credit unions,” NCUA Chairman Todd M. Harper said. “The findings suggest that credit unions are not offsetting this income through reduced fees for other services or lower interest rates. Credit unions that rely heavily on fee income from overdrafts and NSF fees have concentration risk issues, which raises potential safety-and-soundness concerns. And, on the other side of the transaction, consumers who can least afford it are often paying an oversized portion of those fees. It’s time for credit unions to rethink their overdraft and NSF programs.”
Beginning with the first quarter of 2024 Call Report, federally insured credit unions with more than $1 billion in assets were required to submit their year-to-date revenues from overdraft and NSF fees. The Research Note, prepared by NCUA’s Office of the Chief Economist using revenue data from the first three quarters of 2024, evaluates overdraft and NSF revenues as a fraction of total revenues.
The Research Note highlights two observations:
-
Credit unions with higher combined overdraft and NSF fees per member do not seem to have lower fees per member for other services.
-
Credit unions with higher combined overdraft and NSF fee revenues do not seem to be using those fees to “subsidize” better interest rates.
The NCUA’s Office of the Chief Economist will continue to analyze evolving trends in overdraft and NSF fees revenue as additional data become available.