This article first appeared on YourMarketing.Co.
When credit unions were born, they were something radical: financial cooperatives built on seven cooperative principles. Principle #3: Member Economic Participation made us different. Our capital wasn’t owned by investors or shareholders; it was owned by the members.
That structure meant any “profit” we returned through lower interest rates on loans, higher dividends on savings, and no fees or significantly lower fees. We didn’t have to “beat” the banks—we were the alternative to banks. And it wasn’t unfair competition; it was our cooperative design.
When fees became a feature
Then came the era of Courtesy Pay. I remember the day a slick consultant stood before our board, promising that his program would “pay for itself in a few months or your money back.” Great marketing, really. Instead of returning a check, we’d “courteously” pay it, for a fee. Members avoided the embarrassment and potential additional fee, and we got a new revenue stream. Everyone wins, right?
Except, of course, we’d already invented a better solution decades earlier.
Back in the day, when you opened a checking account, it was almost automatic to also open a $500 overdraft line of credit. It built credit history and offered a safety net—at 18% interest. Do the math: paying $25 or $35 to cover a $100 overdraft is a 900%–1200% equivalent APR. The line of credit wasn’t just cheaper; it was cooperative. It helped members grow, not bleed.
The irony comes full circle
Then the CFPB came sniffing around, and suddenly, Courtesy Pay wasn’t looking so “courteous.” Pressure mounted on both banks and credit unions to eliminate NSF and overdraft fees altogether. Ironically, many big banks led the charge—removing those fees entirely.
That’s the part that stings. The very system designed to protect members from predatory pricing somehow began mirroring it. And as the tide shifts back toward transparency and fairness, the institutions that once were the problem are now racing ahead of us to fix it.
And now we face another irony—one that strikes at the very soul of what it means to be a cooperative. Many credit unions are taking that member-owned capital—the collective savings and trust built over decades—and using it to buy banks. Let that sink in.
One of the fundamental differences between a not-for-profit financial cooperative and a for-profit bank is ownership. A credit union is owned by its members. A bank is owned by a handful of shareholders. Only a few people get rich. So when a credit union hands over decades of hard-earned member capital to enrich a few bank shareholders…I don’t even know what to call that.
Do you?
