Credit unions' low-fee recipe
So why are credit unions so much easier on your wallet than banks? It's in part due to how they're structured, McBride says.
"Credit unions have the advantage of being a not-for-profit cooperative that's in business to benefit their members, and one of the ways they benefit their members is by providing lower fees, an easier way to get around fees and lower rates on loan products," he says. "Rather than keeping profits for shareholders (as banks do), the shareholders are account holders, so the benefits get rolled back to them."
Another factor is that most credit unions aren't subject to a rule put into place in 2011 that caps the "swipe fees" financial institutions can charge merchants to process debit card purchases. That cap, created by the Durbin Amendment, left a big hole in bank revenues that they're trying to fill with higher bank fees. Not having to fill that hole has allowed credit unions to keep their fees low and lure customers away from large banks, says Fred Becker, president and CEO of the National Association of Federal Credit Unions.
"Most credit unions aren't affected by the change in interchange rates for debit cards," Becker says. "We're going to be playing bank-fee Whac-a-Mole for a while," referring to the arcade game in which a mechanical mole appears for a player to knock down, which causes another to pop up.
"They're going to be experimenting with charging various fees, and credit unions need to be prepared to take advantage of that," Becker says.