KEY WEST, Fla. – A congressional plan to reign in charges for overdraft protection, known among credit unions as courtesy pay, was widely dismissed here at the Pennsylvania CU Association’s CEO Summit.
Credit union executives said they don’t see a need for a proposal to bring the fees charged for courtesy pay under the Truth in Lending Act, and thus counted as interest–a move that would virtually kill the popular program. That’s because that would cause the annual percentage rate for such short-term loans to bump up against NCUA’s 18% interest rate cap for all credit union loans, which the agency is expected to renew today.
"We haven’t had one single complaint from a member. They like it because it saves them $30 or $60 for a bounced check fee," said Bob Marquette, president of Members 1st FCU, who said he believes the interest in Congress on the issue was created by consumer groups, and not the consumers themselves.
Bruce Foulke, president of American Heritage FCU, said his $675 million credit union counts on significant fees created from courtesy pay they have offered on their checking accounts, some much they recently started offering it on debit accounts. "The members love it," he told The Credit Union Journal yesterday. "They like to not be embarrassed (when they bounce a check)."
More than 2,000 credit unions offer some form of courtesy pay/bounce protection.
