Credit unions are known for being low-fee, member-friendly alternatives to banks, but new statistics show that those who keep their funds at not-for-profit institutions are not immune to rising fees.
Moebs $ervices, an Illinois-based economic research firm, compared overdraft fees at banks and credit unions. The data show that the average cost of an overdraft incident has risen from $25 to $28 at credit unions in the past three years.
Still, that figure is lower than the average of $30 customers will pay at banks. Michael Moebs, CEO of Moebs $ervices, says that customers at the biggest banks in the country are subject to the highest overdraft fees, typically in the $35 range.
"The consumer who either occasionally or frequently have overdrafts saves substantially by going to community banks or credit unions," Moebs says.
While Moebs may be correct that fees are typically lower at small banks and credit unions, I see a different approach to solving the problem. If you're a consumer who "occasionally or frequently" overdraws your account, you shouldn't be worried about finding an institution that charges a few dollars less each time you make a mistake. Instead, you should be focused on monitoring your balances to prevent those costly mistakes from ever happening in the first place.
More importantly, financial institutions can no longer automatically cover charges when an account has insufficient funds. Customers must opt in for this type of protection now. Rather than comparing overdraft fees when selecting a bank or credit union, I would advocate steering clear of overdraft protection altogether and finding an affordable checking account.
Are you still using overdraft protection? If so, why haven't you opted out to eliminate unnecessary fees?