Small credit union CEO dispels overdraft misconceptions
Responding to criticism over the NCUA ceasing publication of individual credit unions’ overdraft data, Afena Federal Credit Union President/CEO Karen Madry set the record straight in an American Banker op-ed.
Madry poked holes in claims that overdraft fees are “innately predatory or at odds with the credit union mantra of ‘people helping people,’” and consumers are not aware of charges for using the service. Data shows otherwise, as Federal Reserve Bank of New York research found that 84% of overdraft users understood the cost in using overdraft services.
A previous op-ed by a former credit union CEO used “cherry-picked and inaccurate data,” is an example of why overdraft disclosure is problematic, shares Madry. In that op-ed, the author incorrectly claims that credit union overdraft fees totaled $3.2 billion in the second quarter of 2024. In reality, this figure is inflated more than three times higher than the actual amount.
Mischaracterizing overdraft data in this way fails to recognize that overdraft services are clearly defined and members must opt-in to use them, giving them a reliable, less-expensive option when they need to make ends meet. And Madry points out that this assumption that overdraft exploits members, rather than recognizing it simply gives them another tool to use when times are tough, does not align with data showing the mission of credit unions is member-focused financial services.
Madry advises that rather than engaging in “alarmist narratives, discussions about credit unions should be grounded in a nuanced understanding of their role in the financial ecosystem and the economic reality of their members.”