In response to the Consumer Financial Protection Bureau’s (CFPB’s) call for comments regarding overdraft practices in the financial marketplace, State Employees’ Credit Union (SECU) issued an initial letter outlining its consumer-friendly overdraft practices and mitigation efforts. The letter highlighted the Credit Union’s low-cost and no-cost overdraft options, as well as consumer-friendly services provided to help members avoid over $53 million in overdraft-related fees.
SECU’s regular overdraft option, utilized by more than 80% of the Credit Union’s 900,000 checking accountholders protects against high fees associated with “bounced checks.” This option provides members with the opportunity to select their deposit accounts, open-end loans or credit card to be used for automatic transfer of funds, when needed to “pay” a checking account item. A $.50 transfer fee is debited from the protected checking account for the service.
However, there are numerous ways for SECU members to avoid fees altogether. Two-way text messaging and alert options allow members to receive information on their mobile device or through online Member Access when potential “red flags” occur on their checking account, such as low balances. In 2011, 8.1 million messages and alerts were sent to members. Likewise, the Credit Union’s “Another Chance” program provides members with an alert when an item is attempting to post to their checking account and there are not sufficient funds to cover the item. Members then have until the end of business day to make a branch or online deposit to avoid all potential non-sufficient funds (NSF) fees. This option saved SECU members nearly $2.6 million in NSF fees in 2011.
Members are also provided with “Fee Free Days” at SECU, when the Credit Union will waive any $12 NSF fees on two separate days during the year in which items marked as NSF are returned, regardless of the number of items. SECU will also waive $.50 overdraft transfer fees on two days each year.
Leigh Brady, SECU Senior Vice President of Education Services, states, “As a not-for-profit financial cooperative, State Employees’ Credit Union operates with a ‘People Helping People’ philosophy and ‘Do the Right Thing’ mentality, designing products and services that offer true consumer value and keep money where it belongs – in the pockets of consumers. This philosophy and mentality have helped to shaped what SECU considers industry-leading, consumer-friendly overdraft best practices.”