Local credit unions are reporting an uptick in inquiries about membership in the wake of announcements by banks to tack on fees to debit card use.
“A lot of folks are fed up with it, they don’t want to be charged for checking accounts or to use debit cards,” said Greg Wheeler, vice president of marketing for Tyndall Federal Credit Union.
Many banks, including Bank of America, Wells Fargo and Chase have announced plans to add monthly fees to previously free debit cards. The move is a response to legislation limiting banks’ ability to set interchange fees, which are fees charged to merchants every time a customer swipes a debit card to make a purchase.
The legislation applies only to financial institutions with more than $10 billion in assets. As the average credit union only has $115 million in assets, credit unions don’t have to make up the lost revenue from interchange fees banks do and, as a result, aren’t raising fees.
Bill Williams, senior vice-president of financial services for Army Aviation Federal Credit Union, said news about the debit card fees just hit, so he expects a big influx of customers in a few weeks once the public has had time to digest the information. However, he said he’s already seen larger numbers of new customers asking about membership in the credit union than usual.
Steve Brown, marketing director for Five Star Credit Union, estimated that his credit union has seen a 20 percent increase in inquiries about new memberships since the news about the debit card fees and an end to free checking accounts at banks hit. Brown said the news came just after an ad campaign talking about the other virtues of credit unions, including lower interest rates for loans and higher interest rates for savings.
“We do hear of some people becoming members specifically because of the fees, but others are coming in after learning about the value of a credit union,” he said.
Credit unions are cooperative financial institutions owned by their customers, called members. Credit unions are non-profit organizations, and the money they make from their banking activities is returned to customers in the form of lower interest rates on loans and higher rates on savings. Credit unions are typically not able to offer some of the investment options that banks are able to offer.
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