USA Today Slams Credit Union Courtesy Pay Fees

Still not too worried about potential changes in Courtesy Pay regulations? It's the big bad banks that people worry about, not us, we're the good guys, right? The Courtesy Pay cash cow most credit unions depend upon may change your hard-fought image in a hurry. Frankly, Courtesy Pay is a little hard to defend. USA Today released an article that calls the Credit Union industry out on their "people helping people" image. Among the quotes from the article:

"they're just not any different than a bank."
"they find every opportunity they can to zap you."
"It's sort of like Robin Hood in reverse,"
"credit unions have also focused more on fee income — and strayed further from their mission of helping members"

They also point out that the Obama administration is pushing to create a regulatory body that could require financial institutions to get consumers' explicit consent for these loans, disclose the credit's high interest rates and warn borrowers at checkout if they're about to overdraw. These efforts, if successful, would cap how much federal credit unions can charge for overdraft fees. That's because if courtesy overdraft is defined as a loan, it would be subject to an interest rate cap — currently 18% — on loans made by federal credit unions. To put this in perspective, this cap could reduce your fee revenue to a small fraction of what you currently earn.

According to Evan Clark, a government based credit union CEO, "There are a lot of credit unions that, if they didn't have overdraft income, they'd go under". Is your credit union in this camp? As I've advocated in the past, it would be prudent to begin a contingency plan now, before the Courtesy Pay rug is pulled out from under you.

Speaking of rugs, also in the News : It was so hot today that thing on Donald Trump’s head was panting.