Affinity Bank Eliminates Insufficient Funds Fee, Reduces Overdraft Fees

Affinity Plus Federal Credit Union, situated in St. Paul, has decreased and redesigned its overdraft costs for transactions honored as a courtesy, eliminating non-sufficient funds penalties in what is being hailed as a first for the state of Minnesota.

The $35 fee for returned checks has been eliminated, the credit union said on Tuesday. When an account is overdrawn, credit unions and banks frequently accept the transaction but charge an overdraft fee. The overdraft cost at Affinity has been reduced from $35 to $15, which is roughly the industry average.

Members who are eligible for “courtesy pay” will have the transaction executed without any fees if the negative balance is less than $100.

The number of members paying dues is anticipated to drop by half because to the $100 “no-fee buzzer zone.” In all, the adjustments are anticipated to lower yearly fee payments by 63 percent, and by 67 percent for Affinity members who belong to ethnic minority groups. According to the credit union, this will result in membership savings of almost $5 million over the following three years.

Dave Larson, president and chief executive officer, said in a written statement that it was the appropriate thing to do for all of our members, but particularly for those who experience financial difficulties or income fluctuation. “We’re here to help our members keep more of their money and make finances less stressful at a time when there is a lot of economic uncertainty,” the statement reads.

In 2020, low-income households with checking accounts reported an average of 9.6 overdrafts, according to Forbes.

According to Larson, a team from Affinity Plus’ various divisions researched potential possibilities for six months and discovered that the credit union had reimbursed more than 45,000 expenses in the first year of the epidemic. So, he added, “we’ve already been going in this route.

The nation’s first all-digital banking cooperative, Dora Financial, was launched by Affinity Plus recently to serve low-to-moderate income families who previously lacked bank accounts or were underserved by the traditional banking sector. Early pay enables members to access their regular paychecks up to two days earlier.

In Minnesota, there are 30 locations of Affinity Plus, a nonprofit financial cooperative with more than 235,000 members.

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