Credit union members sidestep
ATM fees with debit cards
By Michelle Samaad • Bankrate.com

When it comes to having a broader ATM network, banks clearly have the edge over credit unions.

But that's not stopping credit unions from being able to offer convenient, minimal-fee ATM transactions to its members -- thanks to the introduction of debit cards.

Indeed, in a Consumer Federation of America survey of 2,000 credit unions and banks released earlier this year, 22 percent of credit unions polled charged a fee for members to use their own ATMs. Only 7 percent of banks charged their account holders.

While surveys have consistently shown credit unions leading the pack with low rates, members are often hit with fees for ATM transactions to make up for a limited ATM network.

Coastland Federal Credit Union in New Orleans offered some relief when it started its debit card program in May. More than 2,200 of the credit union's 3,000 members use the cards to make withdrawals at point-of-sale transactions.

Getting around fees
"This is how we get around charging fees," said Kim Roth, card services and marketing representative. "We don't charge for point-of -sale purchases and because it works like a credit card, the merchants won't charge them a fee either," she said, adding: "And it's just a lot more convenient than to carrying cash around," she added.

Still, Coastal members pay an 85-cent processing fee each time they use any ATM, in addition to any surcharge levied by the bank that owns the machine.

The debit card is such a big hit that Roth has ordered less ATM cards each month since the beginning of the summer.

Roth also says she noticed that more of the saving account holders and loan recipients are loyal ATM card users, but the bulk of the credit union's members use the debit card.

With a membership of 3,000, Coastland serves Exxon employees around the world so it was "important for our members overseas to be able to use the debit card without having to pay a fee if they were just writing a check," Roth said.

Make it up elsewhere
Calumet Region Credit Union also charges fees set by the Illinois Credit Union League for its ATM program, said Brian Blaszak, vice president of the Chicago-based service center. Members are charged $1 for withdrawals, $2 to make deposits and 50 cents for point of sale transactions.

"Unfortunately, we don't have the ATM terminals all over so we try to compensate in other areas," Blaszak said. Calumet is considering offering debit cards to its members in the near future.

A sign of the times
Some credit unions allow for a certain number of ATM transactions each month and then charge a fee.

The Credit Union of Dodge City allows it members four ATM transactions per month then charges $1 for each one. Like Coastland, more members are using the debit cards to avoid fees, said Karen Brehm, executive vice president of the Kansas-based credit union.

"We're in a rural community so we didn't think it would be successful, but people like the convenience of not having to carry a checkbook everywhere," Brehm said. More than 1,300 of the credit union's 10,000 members use debit cards.

Most of the members of Colorado's Boulder Valley Credit Union use a Visa check card because of the instant account debit, said Steve Carr, vice president of business development.

"We help each other out by letting each other know which ATMs surcharge," Carr said, adding that the credit union's members grudgingly accept fees as a fact of life. "Our members' attitudes is it's a sign of the age we're living in," he said.

Cooperating in networks
As further muscle, a network of credit unions, banks and other financial institutions have joined forces to help users avoid ATM fees.

The Credit Union National Association and the CU Cooperative Systems Inc. (CO-OP) launched the No-Surcharge ATM Alliance last year. To date, 422 financial centers participate.

ATM surcharging started on a national basis in April 1996 when MasterCard's Cirrus network and Visa's Plus network lifted bans on the practice, which allows banks to charge non-account holders fees for using a bank-owned ATM.

More than 2,694 non-surcharging ATMs in Arizona, California, Florida, Hawaii, Massachusetts, New Jersey, New York, New Hampshire, Nevada, Oregon, Texas and Washington are available to members.

Union Bank of California recently pulled its 300 ATMs out of the alliance, according to Irene Whitcomb, CO-OP Network senior vice president of membership and marketing. The alliance's directory can be found on the CUNA and CO-OP Network sites.

And there are other ways around fees. In addition to using credit union ATMs (most are free to members), customers can withdraw more cash to cut down on frequent trips to the ATM. Also, when using the debit feature of an ATM card, remember to ask for cash back at retail outlets such as grocery stores and gas stations.

-- Posted: Aug. 14, 1998