Survey: CUs still free checking leaders

MADISON, Wis. (11/11/08)--Credit unions are still the free checking leaders--so much so that many banks have switched to free-checking institutions to remain competitive--says the just-released 2008-2009 Credit Union Fees Survey from the Credit Union National Association (CUNA).

According to the survey, 80% of credit unions offering checking accounts provide at least one free checking account with no minimum balance requirement and no maintenance or activity fees, up from 65% in 2000. Another 7% offer free checking with other services or club memberships.

However, banks have increased their offerings in this area to remain competitive. In 2000, 28% of banks offered at least one free checking account compared with 68% in 2007, according to Bankrate's Checking Study.

While it may appear on the surface that banks have realized the importance of offering customer-centered products and services, many financial institutions have turned to no-fee checking to increase the number of checking accounts they hold, to increase their earnings from fee income.

Bank fees--including fees from commercial customers--represent nearly 50% of banks' total income, according to current estimates. In comparison, only 12% of credit union income came from fees in 2007, according to CUNA reports and National Credit Union Administration Call Reports.

"Traditionally, fees have been a point of differentiation between banks and credit unions as credit unions tend to focus on maintaining a minimum number and amount of fees in comparison to banks," said Kristina Grebner, CUNA director of research and advisory services. "These practices and the reputation credit unions have as consumer advocates provide them with a competitive edge--and the media has really zeroed in on credit unions' pro-consumer advantages in the current economic crisis."

Numerous fee types and account structures have been documented and analyzed for credit unions of all sizes in the following areas:

Share draft/checking programs;
ATM and debit cards;
ATM surcharges;
Non-sufficient funds/overdraft protection programs;
Automated clearing house;
Foreign and domestic wire transfers;
First-mortgage applications and closing costs;
Member business loan applications and commitments;
Commercial real estate commitments;
Non-member check cashing;
Credit cards, and
Internet banking and bill payments.

The report reveals the percentage of credit unions that offer a certain product and the overall percentage that charge a fee for that product, and distribution of fee income by source. Also, the report includes the average, maximum, and range of amounts charged by credit unions, along with the number of free transactions before a fee is charged. The data tables are broken down by asset size and by region for peer comparison purposes.

The report is available in both hard copy and PDF format. For more information or to order a copy of CUNA's 2008-2009 Credit Union Fees Survey online, use the link.

courtesy of cuna.org