Affinity Bank lowers overdraft fees, kills insufficient-funds fee

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In what’s being billed as a first within the state of Minnesota, St. Paul-based Affinity Plus Federal Credit Union has eliminated its non-sufficient funds fees and reduced and revamped overdraft fees for transactions honored on a courtesy basis.

The credit union announced Tuesday that members no longer will be charged a $35 fee for returned checks. Credit unions and banks often honor a transaction when an account is overdrawn but impose an overdraft fee. Affinity has dropped its overdraft fee from $35, which is about the industry average, down to $15.

If the negative balance is less than $100, members who qualify for “courtesy pay” will see the transaction processed with no fee at all.

The $100 “no-fee buzzer zone” is expected to cut the number of members paying fees by half. Taken together, the changes are expected to reduce fee payments 63 percent annually, and 67 percent for Affinity members of racial minority groups. That’s a membership savings of some $5 million over the next three years, according to the credit union.

“It’s the right thing to do for all of our members, but especially those who face financial challenges or income volatility,” said Dave Larson, president and chief executive officer, in a written statement. “At a time when there’s a lot of economic uncertainty, we’re here to help our members keep more of their money and make finances less stressful.”

Forbes noted that 43 percent of low-income households with checking accounts reported an average of 9.6 overdrafts in 2020.

Larson said a team representing different departments within Affinity Plus studied various options for six months and found that the credit union had refunded more than 45,000 fees during the first year of the pandemic. “So we’ve already been moving in this direction,” he said.

Affinity Plus recently rolled out early pay, allowing members to access their regular paychecks up to two days early, and the nation’s first all-digital banking cooperative, Dora Financial, which is designed to serve low-to-moderate income families who previously did not have a bank account or were underserved by the traditional banking industry.

Affinity Plus, a nonprofit financial cooperative, has 30 branches throughout Minnesota, representing more than 235,000 members.



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