Post from Community: UW Credit Union reduces all overdraft fees to $5 | Milwaukee Neighborhood News Service
UW Credit Union
July 13, 2021
(Photo provided by UW Credit Union)
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Effective today, UW Credit Union will cut its overdraft (OD) and nonsufficient funds (NSF) fees by more than 80%, from $30 per occurrence to $5. The simplified policy creates a meaningful reduction for members and supports national shifts designed to create more equitable banking.
The average NSF/OD fee in the U.S. was more than $33 in 2020, up from $30 in 2010, according to Bankrate.com. UW Credit Union’s new, industry-low fee applies to all its accounts, including checking, savings and money market transactions. UW Credit Union 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 eliminated overdraft fees related to everyday debit card purchases and ATM withdrawals in 2010. These practices remain uncommon among most financial institutions.
While the annual number of NSF/OD fees UW Credit Union 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. For some, the actual amount will be much higher.
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“Everyone comes up short sometimes,” said UW Credit Union President & 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.”
According to The FinHealth Spend Report 2021, low- to moderate-income (LMI) households are nearly twice as likely to overdraft than non-LMI households.
“Aggressive penalty charges are part of the reason that so many community members are unbanked or underbanked,” said Constance Alberts, Bank On Greater Milwaukee program manager. “Overdraft policy changes that include significant fee reductions or the elimination of fees can make a big difference. Equally important is that financial institutions work as partners to their members, providing real-time support and safeguards to avoid fees in the first place. People need more transparency, more resources and more touch points to help them take more ownership of their finances.”
With industry overdraft revenue climbing upward of $31 billion, according to financial data firm Moebs Services Inc., reducing this income is long overdue. 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. The credit union 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’s substantial fee reduction reinforces its pro-consumer position when it comes to sustainable banking. In 2018, the credit union 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.
To learn more about the recent rate reduction, visit https://www.uwcu.org/checking/overdrafts/.
About UW Credit Union
UW Credit Union is a growing, federally insured financial institution and a leading provider of a full range of financial services to University of Wisconsin communities. UW Credit Union’s more than 800 employees serve the financial needs of over 300,000 members through world-class technology systems and through a convenient network of 29 branch locations and over 100 ATMs. With assets exceeding $4.6 billion, UW Credit Union is ranked nationally among the leading credit unions. Founded 90 years ago by members of the University of Wisconsin faculty and staff, UW Credit Union continues to operate as a not-for-profit, member-owned financial cooperative with locations in the Madison, Milwaukee, Stevens Point, Green Bay, Oshkosh, Whitewater and La Crosse areas.