What Free Checking Really Means for Credit Unions

by Amy Neale

 

For those that work within the credit union industry or are just credit union advocates (we’re both!), the results of the recent 2013 Checking Survey from Bankrate should come as no surprise. Here are some highlights:

• 72% of credit union checking accounts remain free while just 39% of banks offer fee-free checking. The average fee most banks charge is $5.54 per month.
• Overdraft/non-sufficient funds fees averaged $26.74 at credit unions and $31.26 at banks.
• When it comes to ATMs, nearly a third of credit unions doesn’t charge members fees for using out-of-network ATMs or waive one of these fees per week. The credit unions that do charge ATM fees usually charge $1 to $1.50. Banks, however, usually charge $2 to $2.50.

      We know that many other people/websites are talking about these survey results and that you may have even read this data already. Not wanting to be redundant, we’ve brought these statistics up for two reasons – both of which are to help your credit union.

 

Keeping it Free

With operating and regulatory costs steeply rising each year, it can be awfully tempting to get rid of your credit union’s free checking. We strongly recommend you look elsewhere for added revenue. Ditching the free checking could mean a substantial portion of your membership will think about ditching you. 

Bank of America has already shown us that consumers are sick of the constant fees – we even have the annual National Bank Transfer Day to remind us of this. The best way to look at your credit union’s free checking is as marketing leverage. The importance of supporting the not-for-profit credit union philosophy should not be underestimated. Credit union members are a loyal bunch, until you start tinkering with their finances, that is. 

Offering low or no fees and great rates have all become part of the credit union mantra. Now is not the time to change that. According to the TD Bank Checking Experience Index, a survey of more than 3,000 U.S. consumers with checking accounts, 12% said they closed or switched their primary checking account in the last two years with 39% saying fees were the main reason. Don’t give your members a reason to close their accounts with you.

On the Money

So, you want to keep your free checking and reasonable loan rates, but expenses are rising and other income like overdraft revenue is at an all-time low. What’s a credit union to do? Get creative and proactive when looking for non-interest income sources, of course. Apart from upping wallet share and membership in general, many credit unions reevaluate their offerings – from credit card programs to online banking – to see where there’s room to grow.

Another area to look into is a reward program with incentives. When implemented properly and maintained diligently, these programs can be a major asset to your credit union. Many of these programs revolve around marketing incentives that will just a little effort on your part can have a nice payoff for your credit union.

The membership enhancement program Invest in America is just such a program. Its partnerships with Sprint, Credit Union Auto Club and others offer marketing incentives based on credit union and credit union member participation. Invest in America is free to join and offers free professional marketing materials to help you earn those incentives.

Whatever route your credit union goes, whichever way it chooses to earn non-interest income – keep your free checking, low fees and great rates. It’ll be worth your while in the long run.