Credit unions are getting a lot of attention as part of the national dialogue about fees for debit cards and checking accounts. I recently talked with Ken Schram on KOMO Radio in Seattle about this trend and what consumers should know. Here's an edited excerpt from that discussion.
Ken: It seems that people are tired of getting fleeced and so they're fleeing -- is that a pretty good analysis?
Greg: Fees are certainly front of mind with consumers, and we've certainly seen great evidence of that in the past couple of weeks. But even earlier this year, we found in a national poll that over 60 percent of Americans said they would consider switching financial institutions if their checking account fees increased. Not only is the awareness much higher than we've seen in years past, I think the inclination for people to act is certainly higher than it has been in years past.
Ken: What is the catalyst at this precise moment?
Greg: Despite a significant drop in the availability of free checking accounts at banks across the country, we have not seen that decline at credit unions. Among the largest credit unions, 76 percent still offer a stand-alone free checking account. In other words, no strings attached, and an additional 20 percent will enable you to get that fee waived with something as simple as direct deposit or online statements. Forty-five percent of banks offer the account free on a stand-alone basis. Many of them do have fee waivers as well, but on a stand-alone basis, there's a huge difference in what we're seeing at banks and what we're seeing among the nation's largest credit unions. When people are looking to shop around and see what their alternatives are, credit unions are certainly one of the avenues to look down.
Ken: And are credit unions exploiting this period of time? I'm wondering if credit unions are still capable of living up to the very good reputation that they've garnered over the years. That you don't have to deal with this impersonal corporate entity with 42,000 branches around the country; we're local folks, we'll take care of you. It's the whole ambiance, if you can use that in association with a bank or a money institution.
Greg: Qualitative factors like that certainly play in. When you look at quantitative factors -- What rates are credit unions paying on deposits? What rates are they charging on loans? -- we routinely see an advantage in the credit union arena. They pay higher rates on deposits and charge lower rates on loans than many of their banking competitors. When you're shopping around, it's certainly an avenue that you have to look down. And in this economic climate, clearly people are watching every dollar. Not feeling like you're being nickled-and-dimed goes a long way with people really dialed into this fee issue and looking to see how they can squeeze every last dollar out of the budget. They're absolutely receptive to the value that many credit unions are offering.