Free checking flourishes at credit unions

For instance, 30 percent of the credit unions surveyed either have no fee for customers who use an out-of-network ATM or provide at least five free out-of-network withdrawals per month. That percentage is the same as the previous two years, according to Bankrate data.

Overdraft fees, known in the industry as NSF fees, or nonsufficient funds, have risen slightly from the last survey, from an average of $26.74 to $26.96. While certainly not an easily accepted expense for consumers who overdraw their accounts, the credit union average is still below banks' NSF average of $32.20.

The most common overdraft fee for credit unions is $25, followed by $30.

Meanwhile, the average surcharge fee, meaning the fee that nonmembers have to pay to use the credit union's ATM, has risen 5 percent from Bankrate's last survey to an average of $2.41. The average surcharge fee has jumped by more than 20 percent since 2010.

"I expect those fees are going to continue to go up as long as the sun is rising in the east," McBride says.

Credit union membership

Membership growing

Growing numbers of consumers have begun to take heed of the lower fees that credit unions offer in the wake of the Great Recession.

"There was a sort of fee fatigue among consumers," McBride says. "You saw a demonstrated movement of consumers from banks into credit unions."

Credit union membership has grown more than 8 percent since 2008, according to data from NAFCU; total assets grew more than 30 percent.

"During the financial crisis, the benefits that credit unions offered -- low rates and fees and fantastic member service -- (were) really highlighted, and customers either moved over from banks or joined a credit union in addition to their bank," Hunt says.

Cornerstone Advisors' Burson says the growth in credit union membership is also part of a larger reaction to "the anti-big-bank kind of mentality."

Moving forward

Expect this plateau in fees and free checking at credit unions to continue, McBride says.

Still, regulatory pressure, a long period of low interest rates and other factors mean credit unions will continue to evaluate their services and offerings.

"Every institution is trying to figure out what to do with fees. The reality is, there are not a lot of things you can do with deposit fees because there are so many options out there for consumers," Burson says.

On the fee front, Burson is starting to see some credit unions charging fees for when a customer doesn't use a service he or she signed up for, such as bill pay. He says when a customer signs up for bill pay, the credit union has to pay a cost to its processor.

McBride says that some credit unions might raise the bar on what a consumer must do to get a free checking account. For instance, they might require a minimum amount in a direct deposit.

"That's a function of economic realities in the sense that banks and credit unions cannot afford to give out a free checking account to everybody that walks in the door," McBride says. "It's a matter of offering it to an engaged customer or member."


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