“The Right Thing to Do:” Affinity Plus Removes NSF Fees

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Following in the footsteps of several large, locally-based national banks Affinity Plus Federal Credit Union this week announced that it had eliminated the insufficient funds fee.

Affinity, one of Minnesota’s largest credit unions, says it’s the first credit union in the state to eliminate fees, which are typically charged when an account holder runs out of money to pay a transaction. The credit union also reduced its overdraft fee from $35 to $15.

But Affinity isn’t the first financial institution in Minnesota to drop NSF fees; earlier this year, Minneapolis-based US Bancorp joined a growing number of major banks that dropped some NSF charges.

Brian Volkmann, executive vice president and chief financial officer of Affinity, said the credit union began lowering some of its usual fees around the onset of Covid-19 in 2020. In the first two months of the pandemic, Affinity was down about 50,000 fees, he said. “It got us thinking about fees in general,” Volkmann said. “What would be the impact if we were to do this in the long term?”

This year, Affinity management completed a comprehensive assessment of the credit union’s fees and presented it to the Board of Directors in June. Affinity’s board then approved the plan to eliminate NSF fees and reduce overdraft fees.

Volkmann said the move may have a small temporary effect on Affinity’s business, but in the long term it would be “very positive” for members of the credit union. The decision may also encourage some people to join Affinity.

“We think we’ll see some new members from this,” Volkmann said. “We will see additional referrals from existing members. We believe growing membership and engaging with existing members will help pay for any lost opportunity here. He noted that the fees represented less than 10% of Affinity’s net income.

According to Affinity’s analysis, the moves are expected to earn members around $5 million in total. In a press release, Affinity President and CEO Dave Larson said the measures were “the right thing to do for all of our members”.

“Many national institutions are announcing the elimination of overdraft fees, but are now returning items rather than paying for them,” Larson said in the statement. “What this really means is that the consumer could still receive a fee from the merchant, but with an added sting of that transaction not being honored.”

Affinity executives believe the fee restructuring will help protect its most “financially vulnerable” members.

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