The National Credit Union Administration (NCUA) has released a Research Note analyzing overdraft and non-sufficient funds (NSF) fees at credit unions. The study examines the relationship between these fees and other revenue streams.
NCUA Chairman Todd M. Harper stated, “This Research Note provides important information for consumers, researchers, credit unions, and regulators about the use of overdraft and NSF fees at credit unions.” He highlighted that the findings indicate credit unions are not compensating for this income with reduced fees for other services or lower interest rates. Harper expressed concerns over concentration risk issues in credit unions heavily reliant on fee income from overdrafts and NSF fees, suggesting potential safety-and-soundness concerns. He added, “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.”
Since the first quarter of 2024, federally insured credit unions with assets exceeding $1 billion have been required to report their year-to-date revenues from overdraft and NSF fees. The Research Note was prepared by NCUA’s Office of the Chief Economist using data from the first three quarters of 2024. It evaluates these revenues as a fraction of total revenues.
The Research Note presents two key observations: credit unions with higher combined overdraft and NSF fees per member do not appear to offer lower fees for other services; similarly, those with higher fee revenues do not seem to use them to provide better interest rates.
The NCUA’s Office of the Chief Economist will continue monitoring trends in overdraft and NSF fee revenue as more data becomes available.
The NCUA is an independent federal agency established by Congress to regulate, charter, and supervise federal credit unions. It operates under the full faith and credit of the United States, managing the National Credit Union Share Insurance Fund which insures deposits for over 135 million account holders across federal and most state-chartered credit unions. The agency also focuses on consumer protection and financial literacy education.
