NSF Fees Shouldn't Exist

I don't think these fees should just be reduced, they should flat-out no longer exist. Perhaps they were once valid, but in 2019, 2020, and beyond, I reject the premise entirely.

Years ago, I can see the validity of such a fee, when things weren't fully automated, and a bounced check actually caused overhead in terms of a paper trail, humans having to do paperwork, and other inconveniences, not to mention issues of fraud.

However, nowadays, virtually everything is done digitally and automatically. The idea that BECU or any bank or credit union for that matter is somehow put out when you have a billing attempt on your account without sufficient funds to cover it, is simply no longer true. It's a complete falsehood.

In fact, not only are you NOT hurting your bank or credit union in any way, you're actually making them a lot of money. They WANT you to rack up those fees because those fees alone are a multibillion dollar industry. So, whenever your bank or credit union uses language to the effect of you having done something wrong that inconveniences them and therefore you're being penalized, it's complete theatrics from a literal script written by the marketing staff and really adds insult to injury.

The idea that it's your fault for being irresponsible is another common fallacy. For those of us who live paycheck to paycheck, it's not about being irresponsible; it's about being poor, which is an important distinction. And the fact that these fees can then make it difficult to cover the next bill that comes along, and can literally be the difference between eating or not, it's a vicious cycle. It's a rough irony, because those of us that get screwed by these fees the most, are the ones that need every single dollar we earn the most.

Here's a basic example: Say you just paid rent and bought groceries so funds are pretty low; you've got $15 left in your account. You then have an automated bill for internet, or TV, or whatever, for $20 come in between you just having paid rent and the next time you get paid. Oops, not only did BECU not do you any favors by actually covering the bill for you so that your service doesn't get shut off, they just slapped you with a $25 NSF fee, that just put your account into negative.

Remember, this is just an automated computer system that rejected the payment because you didn't have sufficient funds. Okay, good, that makes sense; the system is working correctly. But, why not just reject the payment like your card would be rejected at a restaurant and call it good? Where does this imaginary fee for $25 come from?

It's wrong. It might technically be legal (for now anyway — lots of financial establishments are actually getting sued and having to rework their policies because of these predatory practices), but it's definitely not moral.

I moved away from a bank to get away from overdraft fees, but these NSF fees are only a slightly lesser evil. I'm sure there's more to it behind the scenes that might actually help justify these fees, like perhaps even though they're kind of bogus, the system would collapse without the extra revenue, but I'd be happy to open up this debate to the community for anyone who thinks these fees are otherwise legitimate.

Thank you.

8 Comments
Community Manager

Thanks for your feedback @ideasmember, I've shared your comments internally for review. The good news is we offer our members ways to avoid being charged NSF fees altogether. Having a small savings account or LOC (Line of Credit) attached to your checking account will transfer available funds to your checking account to cover the negative balance and avoid any additional cost. If you have any questions, please give us a call at 800-233-2328. Thanks! JohnS

Explorer

@JohnS

 

Thank you for responding, but this response is not helpful.

 

"Just have more money!" isn't a solution. If we had extra money, this wouldn't be an issue to begin with.

 

Also, you haven't offered any insight into the legitimacy of this fee. What hardship, inconvenience, or loss is BECU experiencing to justify a $25 fee? What is $25 covering?

Sightseer

While I can appreciate this, the fact is, NSF fees only occur if you don't have money in both your checking AND savings account. 

The opposite end of this aregument is simply, BE MORE RESPONSIBLE WITH YOUR MONEY.

That said, I have no issue with BECU holding my money for longer then 24 hours. I deposit checks regularly via the app, and anything over $1000, they instantly make $1000 available, and the rest is available in 24 hours. This is also because I have made it a point to have money in both of my accounts as savings. 
Just offering some perspective

Trailblazer

I agree with having NSF fees.

 

People need to learn to be responsible with their money. Overdrawing your account should be very rare.

 

I have a line of credit tied to my checking account so that I never pay an NSF fee. Years ago I've had to draw against my line of credit and then a few days I immediately paid the line of credit balance to $0 only paying a couple cents in interest.

 

Overdrawing an account should in my opinion always incur a penalty when there are other options available to avoid to the NSF altogether.

Explorer

@MsJessieLynne @Coolcolly 

Based on your responses, it doesn't appear that you actually read this thread in full, or if you did, you didn't understand it or you selectively ignored pieces of it that didn't match your views.

I literally made a point to emphasize both arguments that you've mentioned, which you've failed to validly rebuttal; you've simply stated that you disagree, without offering any points as to why you feel that way. In fact, you're just parroting BECU's canned response on the matter.

"Just Be More Responsible; Just Have More Money in Your Accounts"

You clearly have a stereotype in mind for someone who incurs fees. Let me guess, some stoner kid that can't keep a job; that's always trying to charge payments on frivolous items without ever checking their balance first. Sound about right? Sure, that must certainly account for some people. But, here's another scenario for your consideration...

Imagine a single mother of three who's working two full-time jobs and is barely managing to cover rent and groceries each month. Then, one day, her car breaks down. Not being able to afford to get it repaired, she starts taking the bus. This requires her to get up three hours earlier than usual just to be able to make it to her first shift on time.

She continues to struggle to get enough sleep each night and eventually, this unsustainable situation shows its cracks. She's late for work a few times and receives a final warning from her boss. If she's late one more time, she'll be fired. She desperately weighs the pros and cons of her situation and decides that she'll be in much worse shape if she loses this job than if she dips into rent money to get her car repaired.

Juggling all these things, it eventually comes down to it, pay rent on time or feed her kids. All the while she's getting behind on other bills, her account is empty, and she's racking up fees, only digging the hole deeper, making it harder for her to get back on her feet.

Go ahead, tell this woman to her face to "just be more responsible."

That's great that you've both been able to maintain your accounts so well, to have savings, to keep a line of credit, but don't project your situation onto other people. Try and have more empathy than that; try and consider that people have all sorts of different situations that differ from your own that aren't simply as black and white as to just "be more responsible" or "have more money."

Perspective requires thinking about many people's lives, not just your own.

Why is there a fee? What does it actually cover?

With all that I've said above that already makes a strong enough case alone, still, no one has actually even attempted to explain the purpose of this fee. Besides just giving BECU extra income, what is it actually doing? What hardship is BECU or any of its members actually experiencing from a member having a billing attempt without enough money to cover it?

Community Manager

@ideasmember  Perspective is important, so thank you for sharing your very thoughtfully presented scenario. We understand that each member has a unique situation and we pride ourselves on working with our members to empower them to become financially successful. NSF fees are a deterrent for potentially harmful account management practices. While this is the case for some, it is certainly not the case for all, which is why we make exceptions on a case-by-case basis.

 

Some financial institutions choose not to charge NSF fees at all. While this perk seems great, it usually comes with other fees including monthly maintenance charges or other, higher fees for services. Being a not-for-profit cooperative, BECU believes in returning profits to members in the form of better rates, fewer fees, and more financial services. This includes charging lower fees when it’s not possible for us to eliminate the fee completely. It may be helpful to know that there are costs associated with processing transactions that result in an overdraft/overdrawn situation. Whether the item is paid or returned, it is a manual process.

 

Again, we always want to help our members find ways out of a tough situation. We have a great program called Financial Health Check, where we offer free consultations with trained specialists to help our members make decisions and take actions on savings, budgeting, and debt management in real-time during a confidential one-on-one session. If this is something you feel would be helpful, please don’t hesitate to schedule an appointment on the website.

 

Have a great afternoon, JohnS

Explorer

@JohnS

 

Thank you. Your last response is much more specific and gets closer to the knowledge I'm seeking.

 

NSF fees are a deterrent for potentially harmful account management practices.

Are you able to provide any specific examples? Or, is it as simple as encouraging members to keep more money in their accounts, because more money means a more stable ecosystem for BECU and its members overall?

 

It may be helpful to know that there are costs associated with processing transactions that result in an overdraft/overdrawn situation. Whether the item is paid or returned, it is a manual process.

If I understand this correctly, there is only a manual interaction required and cost involved when the transaction is actually posted and the account is overdrawn or will become overdrawn?

 

And if it's simply declined without the transaction going through, that isn't required?

 

In my case, the transaction doesn't actually post and it's all instant and automatic, so it wouldn't matter if it were 3am, when the team are asleep. A billing attempt is made, it's rejected because of NSF and then an NSF fee is applied. This all happens without any human interaction.

 

So, in that case, I wonder if differentiating between declined payments, which don't even necessarily involve the account being overdrawn at all AND payments that are actually covered by BECU in an overdraft situation is something that's worth discussing? Or maybe not...

 

How important are NSF fees to the stability of BECU?

 

Would the entire cooperative collapse without the revenue from these fees, or would it have to otherwise downsize with lay-offs and less locations to survive?

 

What % of revenues come from NSF fees?

 

Are you able to provide any specific numbers or statistics about this?

 

Thank you!

Explorer

@JohnS

 

Can I please get a response, even if it's just to say that you can't answer my questions because the information I'm requesting is confidential? Thanks.