LAFCU in Lansing, Michigan, is slashing its overdraft and non-sufficient funds fee from $32 to 99 cents.

The $1.1 billion-asset credit union said the new policy, which took effect Jan. 27, demonstrates LAFCU’s commitment to making financial services more accessible and affordable for all of its members, especially those from underserved communities.

LAFCU has 74,000 members and earned roughly $112.3 million through the third quarter of 2024 compared to $5.6 million a year earlier, according to call report data from the National Credit Union Administration.

As of Sept. 30, the credit union had taken in more than $5.3 million in fee income in 2024, including $2.3 million in overdraft fees and $801,000 in NSF fees, NCUA data shows.

“At LAFCU, we recognize that many people in our community face financial challenges that make it difficult to access essential services,” said Patrick Spyke, CEO of LAFCU. “It’s not just about the fee — it’s about our philosophy of inclusivity and helping all members achieve financial stability.”

The credit union said in a press release that the decision was driven by LAFCU’s ongoing focus on supporting individuals of modest means, who are often hit hardest by traditional fees. LAFCU believes that everyone should have access to financial services that empower them to thrive, which is why it is confident the policy will offer an immediate and lasting impact.

“By reducing these fees, we are further prioritizing our members,” Spyke said. “We’re focused on helping members reach financial stability, which in turn can lead to greater opportunities for generational wealth building.”

But the credit union believes that offering low-cost services is just one piece of the puzzle in its mission to foster financial independence for its members. LAFCU continues to expand financial literacy and stability through its Pathways to Financial Transformation course, which helps participants navigate their journeys to financial independence.

Other states have already begun forcing the hands of their financial institutions on fee reduction.

Last year, California Attorney General Rob Bonta put small banks and credit unions on notice about charging consumers excessive fees.

California consumers paid an estimated $200 million in overdraft fees in 2022, with the financial burden disproportionately affecting low-income individuals and consumers of color, Bonta said.

The Consumer Financial Protection Bureau said that only 22% of households that were charged an overdraft or insufficient fund fee in 2023 expected the charge.

The CFPB proposed a rule aimed at reducing overdraft fees at banks with more than $10 billion in assets to between $3 and $14.

“At LAFCU, we recognize that many people in our community face financial challenges that make it difficult to access essential services.”

 – Patrick Spyke
CEO
LAFCU