2011 Credit Union Checking Study
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Credit unions: free-checking champions

2011 Credit Union Checking Study » Credit unions: free-checking champions

Credit unions may be on the receiving end of a fusillade of new government regulations, but if those changes are costing them money, it's hard to tell by the way they're treating their customers.

Survey results
Bankrate surveyed 50 of the nation's largest credit unions to find the best checking accounts. See the results in Bankrate's 2011 Credit Union Checking Study.

"Free checking remains alive and well at credit unions," says Greg McBride, CFA, senior financial analyst at Bankrate.com.

Of the 50 credit unions surveyed for Bankrate.com's 2011 Credit Union Checking Study, 38 of them, or 76 percent, offer free checking accounts with no strings attached. When you include credit unions that waive fees if members agree to meet certain conditions, the number jumps even higher.

"An additional 20 percent of credit unions will waive the fee, usually with direct deposit and/or e-statement," McBride says. "Together, that's 96 percent of the credit unions offering checking that is free or can become free with pretty minimal effort."

More free checking at credit unions

In contrast, only 65 percent of banks offered free checking with no strings attached, according to Bankrate.com's 2010 Checking Study. Why the discrepancy?

"It's a derivative of credit unions' structure, as they're not-for-profit," says Lydia Cole, industry analyst for Callahan & Associates, a credit union industry research firm in Washington, D.C.

"They certainly need to make profit to build capital and make future investments. But the members are really the owners of the different credit union cooperatives, and so they're not focused on individual product profitability," Cole says. "They don't need to make sure that checking is a profitable product for them or a break-even product."

Cole says credit unions often see checking accounts as only a small element of a larger relationship with members.

"(Credit unions) can really focus on member relationships and make sure that checking is integrated into an auto loan and a mortgage and a credit card, and altogether the member is profitable and contributes to the credit union's success. But they don't have to make sure that an individual product is profitable," she says.

However, credit unions aren't excluded from having to hike the incremental fee and the minimum balance to open an account that nearly all financial institutions deal with every year, says Fred Becker, president of the National Association of Federal Credit Unions in Arlington, Va.

"Although inflation's been relatively flat, the cost of basic services is going up -- your utility bills, your taxes -- just like for any other business operation," Becker says.

Those annual increases in operating costs are paid for in part by raising credit union fees, he says.

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And raise fees, they did. To withdraw money from the ATM of a top-50 credit union where you're not a member, you'll pay an average of $2.10 per withdrawal this year, up from $2 in 2010, an increase of 5 percent. Also, credit union members will pay a little more to bounce a check this year. Nonsufficient funds, or NSF, fees climbed about 5 percent, from an average of $24.88 to $26.05.

The average minimum balance needed to open a credit union checking account also increased. Last year, the average amount of money you needed to start banking at a credit union was at least $124.94. This year, you'll need to deposit $134.56, an increase of 7.5 percent. If that seems high, you can get a checking account at one of the credit unions that have no minimum opening balance. In the Bankrate survey, 46 percent of the credit unions say they don't require a minimum.

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