LOS ANGELES, Jan. 26, 2022 /PRNewswire/ -- University Credit Union (UCU) is the first credit union in California to announce the elimination of the overdraft fee for all member-owners effective January 3, 2022. Simply, this means if a member overdrafts their account, they will no longer be charged an overdraft fee to cover the purchase. This change is aimed to promote greater economic inclusion and equity for all members.
According to research released by the Consumer Financial Protection Bureau (CFPB), revenue from overdraft fees and non-sufficient funds (NSF) fees reached $15.47 billion in 2019. The study also found that less than 9% of consumer accounts account for close to 80% of all overdraft revenue, which highlights the economic disparity of the fee structure for certain consumers.
Furthermore, the CFPB also found that although small institutions with overdraft programs charged lower fees on average, consumer outcomes of those fees were similar to those at larger banks.
"The overdraft protection fee is a controversial fee structure that has historically had a negative impact on financially vulnerable members," Dr. David Tuyo, CEO of University Credit Union, says. "As a not-for-profit financial cooperative, it's our top priority to give all of our members the financial advantages they need to succeed."
This policy change will greatly benefit members by decreasing financial stress for employees, students, alumni, and other stakeholders in university communities. In addition to UCU's guarantee to provide loan rates within the top 1% of financial institutions in the country, this is one more example of how UCU is leading the industry towards more equitable treatment of all banking consumers and promoting greater economic inclusion for its members.
About University Credit Union: University Credit Union, a federally-insured financial cooperative, was founded in 1951 on UCLA's campus by faculty and staff. Serving nearly 50,000 members and holding over $1 billion in assets, UCU has become a leading credit union in the United States. UCU is guided by a board of directors, comprised only of faculty, staff and alumni of the university community. UCU's core purpose is to give members a financial advantage in life, and with their promise to advocate, educate and innovate, UCU is an industry-leading financial partner to university communities.
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SOURCE University Credit Union