Many U.S. consumers have been convinced to join a local credit union, with the idea that the fees will be lower than what they find at big banks.

While overdraft fees vary with each credit union and bank, the average overdraft fee in the United States is about $33.07. High overdraft fees at banks and credit unions are common across the country, and experts say that those fees are only expected to rise in the coming years.

However, reports suggest that these advertised lower fees are simply a tool to gain customers, and that those same credit unions may be raising their overdraft fees at an even faster rate than the big banks from which their customers are trying to escape.

On top of increasing overdraft fees, credit unions like Space Coast Credit Union and Patelco Credit Union are reportedly going out of their way to maximize overdraft fees on overdrawn bank accounts.

Overdrawn bank accounts are never good for consumers, and many credit unions are capitalizing on this misfortune by steadily increasing overdraft fee charges. Many consumers also report their credit unions deliberately process transactions out of order so that they can maximize the overdraft fees they can charge for an overdrawn bank account.

What Are Overdraft Fees?

An overdraft fee is incurred on an overdrawn bank account, charged to move money to a checking account in order to cover a transaction. While the transfer may be from a linked account, it might also be a loan from a financial institution.

Overdraft fees are also known as insufficient funds fees, courtesy pay fees, or other similar names.

As of August 2010, banks and credit unions are prohibited from charging overdraft fees unless the customer has opted-in to their overdraft protection program.

Consumer advocates report that those who opt in to overdraft protection services tend to be charged more in fees than those who do not.

Overdraft Fees Lawsuits

Many Americans do not end up paying overdraft fees, having enough financial stability to avoid overdrawing their accounts under overdraft protection.

However, banks and credit unions still manage to profit from these service charges and overdraft fees. The consumers who struggle to maintain a minimum balance in their accounts tend to be penalized with excessive fees, and make up a good portion of the money generating profit for big banks and credit unions.

The largest U.S. banks rake in millions from overdraft protection fees alone, and in most cases, this money comes from the Americans who can least afford it.

Smaller financial institutions, such as Space Coast Credit Union and Patelco Credit Union, may also be involved in these overdraft fees practices. A growing number of overdraft fees lawsuits are confronting the way these financial institutions run overdraft programs.

Overdraft fees lawsuits allege that the overdraft programs of some banks and credit unions involve excessive overdraft limits, and are often not transparent, available, and comprehensible for their customers.

If you or someone you know has been subjected to excess or heavy overdraft fees or account closures and believe your credit union or bank may be at fault, you may be able to join a class action overdraft fees lawsuit.

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