Many bank and credit union customers fed up with unfair banking fees are turning to online only banking options.

Complaints surrounding current banking fee practices have caused the Consumer Financial Protection Bureau to look into bank and credit union overdraft fee practices.

Consumer protection attorneys are currently investigating the possibility of bringing legal claims against several credit union companies in the United States. In the meantime, many consumers are also taking action by switching to online only banks.

Online Banking Options

A Portland, Oregon. based banking company called Simple is one of many new online only banks. The online bank recently eliminated all fees for their banking customers.

According to Josh Reich the CEO of Simple, the company would rather generate revenue from interest and interchange instead of when customers make mistakes or use their accounts. Simple believes their customers should have access to their money when they need it, without any fees attached.

Online only banks are a fairly recent development. These companies claim that in this mobile and internet age actual bank branches are unnecessary for many customers. By not having physical branches, online banks have cut significant costs and assert that they can better serve their customers needs.

Many of these online banks can afford to charge their customers lower fees and reward customers with higher interest rates. Simple also provides its users with a sleek and sophisticated online app for managing personal finances. Unlike many personal financing apps, Simple’s interface can actually move a customer’s money rather than just plan for budgeting and savings.

Simple’s recent fee elimination includes getting rid of overcharge fees. This is done by not allowing customers to spend more than their accounts hold. Instead of charging fees, these online banks earn money on interest and usage fees paid by merchants.

Credit Union Overdraft Fees

Many consumers are turning to these online only banks as credit unions are increasing their banking fees. With few consumers overdrawing their accounts, credit unions are losing necessary revenue.

Some consumer reports have suggested that various credit unions have gone so far as to process transactions out of order in an attempt to incur the largest possible overdraft fee.

An overage fee or overdraft charge is a fee incurred by a consumer when they spend more money than is currently in their bank account. The bank fronts funds to cover the initial purchase but then charges the customer for the convenience.

In 2010, it became illegal for financial institutions to charge overdraft fees unless the customer actively opted into an overdraft protection program. Claims asserted in credit union overdraft fee lawsuits include failure to disclose fee structures and mismanagement of funds.

Some of the largest credit unions in the nation include: The Golden 1 Credit Union, Sacramento, Calif.; Alliant Credit Union, Chicago, Ill.; Security Service Federal Credit Union, San Antonio, Texas; Star One Credit Union, Sunnyvale, Calif; and First Technology Federal Credit Union, Mountain View, Calif.

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