MADISON, Wis.– UW Credit Union said it has now cut its overdraft and nonsufficient funds fees by more than 80% to just $5 per occurrence, from its prior fee of $30.
The simplified policy “creates a meaningful reduction for members and supports national shifts designed to create more equitable banking,” the credit union reported.
The move comes at the same time one big bank has announced the elimination of its overdraft fee, and as bills are again reintroduced in Congress to also eliminate the fees.
The average NSF/OD fee in the U.S. was more than $33 in 2020, up from $30 in 2010, UWCU said, citing Bankrate.com data.
UW Credit Union said the new $5 fee applies to all its accounts, including checking, savings and money market transactions. UW Credit Union further said it will continue to provide a (-)$10 threshold, under which no fees will be charged, as well as limit fees to a maximum of one per day. UW Credit Union noted it eliminated overdraft fees related to everyday debit card purchases and ATM withdrawals in 2010.
“These practices remain uncommon among most financial institutions,” the credit union said in announcing the pricing change.
‘Everyone Comes Up Short Sometimes’
According to the $4.6-billion UWCU, while the annual number of NSF/OD fees it charges is low by industry standards, 8% of its 300,000 members pay one or more NSF/OD fees per year, with an average of nearly four fees per year. The new policy could save these members approximately $100 annually, the credit union stated, adding that for some, the actual amount will be much higher.
“Everyone comes up short sometimes,” said UW Credit Union President and CEO Paul Kundert. “From a student managing their first bank account to families who lose track of their current balance, our goal for all members is to help them accumulate wealth, not erode it. While some fee is necessary to discourage behaviors that may harm local businesses and other members, it should be reasonable and applied equitably.”
In making its announcement, UWCU pointed to The FinHealth Spend Report 2021, which found low- to moderate-income (LMI) households are nearly twice as likely to overdraft than non-LMI households.
“With industry overdraft revenue climbing upward of $31 billion, according to financial data firm Moebs Services Inc., reducing this income is long overdue,” UWCU said. “Actionable fee prevention efforts may help bolster these policy changes. UW Credit Union members can set up automatic alerts to notify them when an indicated account dips below a specified balance or when a transaction greater than a specified amount clears an account. The alerts are free, immediate and easily adjusted at any time.”
Other Resources Available
UWCU, whose core membership is the University of Wisconsin, said it also offers a variety of in-person and virtual educational finance events to help people build their budgeting skills, track personal spending and set realistic financial goals. Events are free and open to the public.
UW Credit Union said its substantial fee reduction “reinforces its pro-consumer position when it comes to sustainable banking.”
The credit union noted that in 2018 it introduced its Clear, Launch and Encore accounts for individuals who prefer to have no overdraft-related fees. All transactions that could cause an overdraft are returned unpaid, free of charge. Today, 25% to 30% of all new accounts opened are one of those account types, UWCU said.
UWCU is offering additional information at https://www.uwcu.org/checking/overdrafts/.