Free checking flourishes at credit unions

Checking » Credit Union » Free Checking Flourishes At Credit Unions

Free checking is alive and well, and credit unions are at least partially responsible.

What's more, credit union checking fees appear to be plateauing, at least for now.

Bankrate's 2014 Credit Union Checking Survey found that 72 percent of the nation's 50 largest credit unions offer a free checking account, meaning the account charges no monthly service fees or point-of-sale transaction fees regardless of the balance.

The number of credit unions offering these free checking accounts has held steady for the past few years, although they are down slightly from 78 percent in 2010.

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"This is good," says Greg McBride, CFA, Bankrate's senior financial analyst. "It means free checking accounts remain a staple of the product lineup at many credit unions, and they aren't going away."

In contrast, the percentage of free checking accounts at banks fell from 76 percent in 2009 to only 38 percent in 2013, according to Bankrate's data. However, McBride says that the number of free bank checking accounts appears to be stabilizing.

Free credit union checking versus free bank checking

Even for those checking accounts that aren't free, there are often ways to get around having to pay those fees. For instance, Alaska USA Federal Credit Union in Anchorage, Alaska, waives its $5 monthly service fee if a consumer uses direct deposit to put money into the checking account.

Factoring in those sorts of waivers, where a consumer has to meet conditions like signing on to e-statements or maintaining a minimum balance, the number of free checking accounts jumps to 96 percent.

"For all the talk about the death of free checking, nothing could be further from the truth," McBride says.

Credit unions' orientation as not-for-profit cooperatives who are beholden to their members rather than to shareholders is a big reason why so many have maintained free checking, says Jim Burson, a senior director with Cornerstone Advisors, a financial industry consulting firm.

"It's really a service orientation for members versus a sales orientation of banks," Burson says. "You have (credit unions) saying, 'I don't want to fee my members to death.'"

Indeed, that focus on free checking and lower fees is a point of pride -- and marketing -- for credit unions.

"Credit unions and credit union members really value free checking as a service," says Carrie Hunt, senior vice president of government affairs and general counsel for the National Association of Federal Credit Unions. "A lot of credit unions feel very strongly about maintaining that service even with tightening margins because it's something that's core to being a credit union."

Fees remain steady

Bankrate's survey, conducted Jan. 6-16, looked also at other fees from credit unions, finding that many stayed relatively steady over last year's survey.


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