Wednesday, February 14, 2024

SECU: Consider This - Chapter 14: Esse Quam Videri - Overdraft/NSF Fees, A Second Chance?

😎 Welcome to Unicorn World!: "Where seeing - not seeming - is believing!" ... different by design.

Esse Quam Videri - "To be, rather than to seem." 

The first rule in building a unicorn credit union is to look for opportunities to solve financial problems for the members.  Any old bank or "bank-wannabee" credit union can offer savings accounts, checking accounts, and loans -  nothing much to that, hey, that's industry standard!

Financial institutions are in the business of "buying and selling" money; and for most people, having enough money is a constant challenge.  So, Econ 101: Supply&Demand - the "demand" for money is universal and the "supply" is limited, therefore in finance, you have an unlimited number of customers all clamoring for your product. Not really that difficult a business then, is it? That's why you've never met a brain surgeon working at a bank - or credit union.   

✅ Now about those Overdraft/NSF* Fees: Most of us call it "Bouncing a Check"! ["NSF" - is short for "non-sufficient funds"]

Financial institutions make mega-money off charging their customers penalty fees of all types, often hilariously referred to as : "Service fees"! Same kind of whacky logic would mean that when a N.C. highway patrolman gives me a ticket, he is simply charging me a "service fee". Nah, pretty sure that's not what that ticket is all about.

If you believe that risk-based lending (RBL) is fair, then you probably believe that your fellow members ought to be slapped around a little - and "ticketed" - for bouncing a check. After all it is "The Eighth Deadly Sin", isn't it? - ranking right up there with sloth, lust, gluttony, greed, etc.

NSF fees in recent history have averaged @ $30 a pop and are a source of wild amounts of income for banks - and credit unions. If a customer makes a innocent mistake or miscalculates, then "hit 'em up" - hit 'em up good! "They" sin, "We" profit - have a familiar ring to it? 

SECU charged members $21 million in NSF fees last year ($17 million in 2022) and is on track to collect @ 30 million this year. (Don't forget that when a check is returned to a store, those folks usually charge another $20-$30 fee, too!)

SECU always had one of the lowest NSF fees around - $12 vs the others $30. There are costs and losses in handling NSF's, but those cost aren't really that much. No need to gouge the member just because you can is the way the thinking use to go at SECU - but times have changed.

But that's not the SECU NSF unicorn story. From the members perspective, NSF's are not a "cash cow". For members, NSF's are either an embarrassing oversight or an expensive financial problem. The "dirty little secret" you need to know is that @85% of the NSF fees charged are to only 8% or so of the members who bounce a check. Most members incur an overdraft rarely (generally by accident); that $30 million is being slammed against just a very few members, who obviously can't afford huge "service fees" - but who's problem is that?

To try and help all members, SECU introduced a new service: "Second Chance: NSF Free Days". New programs are always the result of the efforts of many employees; but Sue Douglas, former COO at SECU, probably deserves the "Atta-girl" on this one. The program was straight forward; starting January 1, each member was permitted two free overdraft days each year, with immediate alerts to provide members 24 hours to "cover the checks" without a return. The "two free day" clock would be reset each January 1.

That took care of the embarrassing oversights and did wonders for the reputation of SECU with the member-owners - they didn't have to worry about an overdraft any longer! The members could see the difference at their credit union!  

Now what about those other members - the "Naughty 8" %? [not to be confused with the "Crazy 8's"!]. It will probably surprise you, but members with recurring NSF's were told, if they overdrew more than 6 times a year that their account would be closed (and the credit union would show them how to use their base share account, the statewide branches, and 1200 ATMs to handle their financial transactions at no cost.) Members were told that they couldn't afford to pay "$30 million" in penalty NSF fees - that they had better uses for those hard earned dollars! 

And that, their credit union didn't need to "make it's living" off of their misery - the members agreed!


... "To be, rather than to seem"! ... ESSE QUAM!




  1. Another chance is a great program too, and helps lots of members.

  2. I remember when I first started at SECU I bounced a check, of course I felt embarrassed. Needless to say I received a letter, in the mail, with a stern reprimand from Sue about how we as employees need to set a good example etc.... Needless to say THAT never happened again! I probably lost several nights worth of sleep after that .... LOL ;)

    1. I got 2 nsf fees in a row from a ach mistake, and my svp told me if I get another one they would fire me. So u haven't had one since.

  3. Sure was good when NSF/overdraft was tied to SECU credit card. Why did the Crazy 8s end that program? Because it helped the members? Capital One does it....

    1. Because it’s a “cash advance” and interest starts day one. That’s one of the few things the 8 have gotten right.

      Paying interest on a credit card is dumb. Advocating anything that capital one does is dumb. Doing business with a company whose sole purpose is to take advantage of and steal your money is dumb.

    2. Still liked having the option of a "cash advance" when I don't have any cash anywhere else to advance. Guess I need a payday loan but life doesn't always cooperate. They did that when Mike Lord was there and Jim Blaine. And the cerdit card rates when so horrible as they are these days. why don't you guys lower the rates back down and give us back our no frills card??? You sure sound like a Brady Bunch to me.

    3. Arrogant is how it sounds. Home Equity Line of credit, that SECU still allows as overdraft, charges interest from day one also. Are those people dumb too? or is that ok because they aren't renting?

    4. sounds like doing business with the credit union is now dumb! Let get it back to members helping each other out. Lately the sole purpose of SECU seems to be to help out the elites at the expense of the majority of members-- and those folks that SECU is mandated to serve. Taking advantage of you when you are down and out was not the right thing for 85 years. Is now!

    5. @12:37 Overdraft from an Open-End Signature loan (APR range 13% - 18%) is a “cash advance” and interest starts day one. That's still an overdraft option. Removing the Visa overdraft option is NOT one thing the 8 has gotten right.

    6. hey folks! Can't fix "dumb"@12:37. It's just like trying to fix the Crazy 8. Have to get rid of them. 4 MORE in 24

    7. Occasionally, I may make innocent mistakes or miscalculations, as nobody is perfect. I currently use my Visa credit card as my overdraft account, and typically repay any amount owed within a day or two, often paying back very little (e.g., 20 cents). It's very helpful. All members should have the option to add their Visa as overdraft.
      Also, If SECU provided fair rates, they wouldn't disadvantage the members who utilize this option.

  4. Cc is still an option if you had it as overdraft before the change.