Fees Still Lower at Credit Unions

The Federal investigations of fees will not exempt credit unions, but we members can sleep more peacefully knowing that we are less gorged by fees than our banking friends.

The latest research comparing the fees on deposit products between credit union and bank customers by Researchers Victor Stango, a professor of economics at the University of California, Davis, and Jonathan Zinman, a professor of economics at Dartmouth College, report the following key findings:

- Average annual costs on bank checking accounts are more than twice as high as those on credit union share draft accounts.

- Some of the bank/credit union difference can be explained by a greater number of fee-incurring transactions on bank checking accounts.

- The greatest component of annual costs of both bank and credit union accounts is the overdraft fee, which is roughly one-third lower at credit unions.

Nobody likes to pay fees at a financial institution (FI) or anywhere else. Fees have always been around and were originally intended to discourage certain behaviors like paying bills late, spending more than is in your account or using another financial institutions ATM. But most FIs learned early on that fees were also a great way to make money. So they literally cashed in on consumer behavior. Over the years FIs found even that increasing the amounts of the fees didn’t change our behavior much, we still did all those things that trigger fees. So the FIs kept raising fees for easy profit. Now with profits shrinking in other areas of their business, fees have come to be looked on as even more valuable.