Mike Beall, President of the Maryland and DC Credit Union Association, recently had a letter published in USA Today regarding overdraft protection programs – often called “courtesy pay.” Courtesy pay is not a target product of REAL Solutions. However, many low-income families are using and have come to depend on this product.
While we do not promote or refute the use of this product, we want to know what do you think:
Do courtesy pay programs benefit and promote good money management strategies for low wage working families? If so how?
If not, why not?
Answer simply through our survey and click here to leave a comment.
Here is Mike’s letter:
USA TODAY’s recent article about courtesy payments characterized this service, which covers members’ checks when they have insufficient funds, as primarily a profit center for credit unions (“Credit unions hit customers with fees, too,” Cover story, Money, Aug. 4).
Such courtesy payments are a short-term safety net for members struggling to stay on their feet.
The article underscores important differences in the way credit unions and banks make courtesy payment available: Credit unions charge significantly less than banks for covering member checks and typically use the fees to subsidize favorable interest rates for other services.
Although courtesy payments have detractors, we think it’s important for policymakers to remember the value of this service.
As credit unions, we also recognize our obligation to educate our members about the responsibility they must shoulder as the ultimate stewards of their financial resources.