If you bank at ESL Federal Credit Union, you might have been charged a hefty overdraft fee.

According to ESL’s website, the credit union offers three different overdraft protection options that customers may choose:

Cash Reserve: The Cash Reserve overdraft protection option is a line of credit tied to the ESL checking account. Funds automatically transfer from the line of credit to the checking account when the account is overdrawn. Even though there is no fee per transfer, the Cash Reserve overdraft protection requires credit approval. The advance amounts are sent over in $100 increments, subject to an interest rate, which currently is 17.90 percent.

CheckOK: The CheckOK overdraft protection option links an ESL savings account to the ESL checking account. Money from savings account automatically is transferred to the ESL checking account to cover any transactions that cause an overdraft. The customer is charged a $5 service fee, but there is a maximum of one fee per day even if multiple transactions incur overdrafts that day.

Courtesy Pay: The Courtesy Pay overdraft protection option enables the credit union to cover the transactions when there is not enough money in the checking account to prevent an overdraft. ESL says Courtesy Pay prevents the payment from being rejected or returned due to insufficient funds. There is a $37 fee for each overdraft transaction.

Interestingly, ESL’s website says its Courtesy Pay overdraft protection automatically enrolls eligible accounts into the program, but the customer “may elect to opt out of automatic enrollment.”

The Federal Deposit Insurance Corporation (FDIC) is the government entity that regulates financial institutions in the United States. According to FDIC rules, the boards of directors and managers at financial institutions must “ensure the institution mitigates the risks associated with offering automated overdraft payment programs…” and that the institution honors a customer’s request to opt out of overdraft coverage in a timely manner.

The FDIC also says that consumers should have the opportunity to pick the overdraft payment option that best suits their needs.

In addition, the FDIC says institutions should not process transactions in a way that maximizes the number of overdraft fees issued per day.

The Rise of the Overdraft Fee

According to Moebs Services, Americans paid more than $34 billion in overdraft fees in 2017 alone, the most paid since 2009. Moebs is an independent research company that specializes in data of financial institutions.

Moebs Services determined that credit unions, which used to be known as more consumer-friendly than banks, have slowly increased their fees over the years.

At $37 per overdraft transaction, ESL Federal Credit Union is more expensive than the average overdraft fee at a bank, which Moebs Services says is currently $30.

The Consumer Financial Protection Bureau says that only eight percent of checking account customers pay nearly 75 percent of all overdraft fees. Some members of Congress say such statistics indicate predatory behavior by financial institutions that make billions of dollars off of the nation’s poorest consumers.

If you were charged unfair overdraft fees by your bank or credit union, you could be eligible to participate in a FREE class action lawsuit investigation. If you qualify, an attorney will contact you to discuss the details of your potential case at no charge to you.

Fill out the form on this page now for a free, immediate, and confidential case evaluation.

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