What’s Special about a Cooperative’s Overdraft Fee?

Most would answer “nothing.” The fee is just another way to grow non-interest revenue.

An article about Alpena Credit Union lowering its overdraft fee again, from $19.52 to $17.50, brought to mind a conversation I recently had with a CEO.

A $35 Fee for “Courtesy” Pay

The discussion was how to explain a $35 fee for clearing a member’s check on an overdrawn account.

This amount would equal a half day’s (four hours) take home pay for a member earning at or near the minimum wage of $10 per hour in their community. The team needs more money to make budget. What choice do we have? The CEO responded, what kind of a co-op do we want to be?

Finding the Right Performance Metric as a Co-op

He further asked whether the strategy was to grow income or member relationships?

The lack of clarity was further confused by the metrics the credit union tracked for acceptable performance. All of the ratios had to do with balance sheet financial outcomes: growth, ROA, expense ratios, productivity goals, etc. In other words, an examiner’s financial checklist.

Members were not the focus of any tactical criteria, except to get more of their business.

He then raised the topic of cooperative metrics. How are we tracking cooperative tactical success? What would these say about who we are and what our business evolution should look like?

His point of view was that to be true to ourselves, credit unions are supposed to enhance member well-being. Absent meaningful metrics, there can be no practical oversight or peer comparisons for what makes cooperatives different. The risk is that members will see credit unions as insincere, just another financial option with a gentler persona.

The right metrics are a choice for every credit union. In this case, is your credit union a $35 or $17.50 co-op? What would your member choose?

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