A substantial number of consumers reportedly chose to join credit unions in the last few years because of their “smaller feel” and advertised lower fees.

Credit unions appeared to fill a niche for individuals wanting to move away from bigger banks and and the draw of lower fees such as overdraft fees was a part of the appeal.

Recently, however, consumers have become more disillusioned with credit unions and have felt that they aren’t that much different from bigger banks when it comes to fees like overdraft charges, as those fees are reportedly rising at a faster rate at some credit unions than traditional banks.

How Do Overdraft Fees Work?

Overdraft fees typically work like this: Let’s say you are buying $100 in groceries, but unbeknownst to you, there is only $96 left in your checking account. You use your debit card linked to your checking account and the transaction is approved.

You stop at a local coffee shop and order a $4 drink on your way home, also approved. Your paycheck gets deposited the next day, and you are back in the positive for the month.

The next time you check your balance or receive a statement, you see that $4 was transferred into your checking account when your balance was only $96 when you made the $100 purchase. Your bank transferred the $4 over from your savings account to cover you, but they charged you $25 to do it.

Then you see the same thing happened when you bought your $4 coffee, the money was transferred from your savings and you were hit with another $25 overdraft fee. So two small purchases in $4 excess of your balance, times two, hits you with $50 in fees.

Some credit unions have a daily maximum of one charge issued per day, some may charge up to four of these fees per day. Others may not have a maximum, so if you are making a lot of purchases in one day, you could be facing overdraft fees with every purchase.

A Closer Look: Overdraft Fees at Two Top-Ten Credit Unions

Boeing Employees Credit Union (BECU) and First Technology Federal Credit Union (FTFCU) are two large credit unions with assets in the top ten in the nation. The overdraft fees at these two credit unions are fairly comparable to each other and to other credit unions on the whole.

The BECU website states that they offer an optional service called “Courtesy Pay” where they will cover the debit card transaction so that the purchase may be completed. The overdraft fee of $25 for the “Courtesy Pay” service is due immediately and is payable on demand.

At First Technology Federal Credit Union, the overdraft fee is even higher than BECU at $28 per transaction. However, First Technology Federal Credit Union’s overdraft fee is actually closer to the median overdraft fee for financial institutions.

According to an FDIC survey, the median overdraft fee is $27 and the range of overdraft fees is from $10 to $38.

Filing a Credit Union Overdraft Fee Lawsuit

If you have been charged overdraft fees from Boeing Federal Credit Union, First Technology Credit Union or another credit union, you may have a legal claim. Attorneys are currently investigating credit union overdraft fee practices and can review your case at no cost to you to help you in understanding your legal options.

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