Credit union membership soars as bank customers flee
November 15, 2011
Although some big banks have backed away from plans to charge new monthly fees for checking accounts and debit cards, the exodus of customers to credit unions still appears to be accelerating.
In October, the National Association of Federal Credit Unions recorded a 350 percent increase in traffic to its website, which helps customers find nearby credit unions. Some individual credit unions say they are on pace to add up to 23 percent more checking accounts this year--more than three times their usual rate.
The national "Move Your Bank Day" on Nov. 5--an event backed in part by the spreading Occupy Wall Street movement--urged customers, particularly those tired of the new fees and low interest rates offered by most big banks, to take their money elsewhere.
In recent months banks have introduced numerous new checking account and debit card fees, citing new federal regulations that cap how much they can charge retailers every time you buy something with your debit card. Those swipe fees once averaged 44 cents per transaction, but the Durbin Amendment cut that figure nearly in half. Credit unions and small banks with less than $10 billion in assets are exempt from the caps.
Although credit unions often don't have many branches or ATMs, their non-profit nature means the money they make on loans gets returned to members in the form of higher interest rates on savings accounts and lower interest rates on loans. The best CD rates at credit unions tend to be higher than at commercial banks, and their deposits, rather than being FDIC-insured, are insured by the National Credit Union Administration.
While the percentage of banks offering free checking accounts has shrunk in recent months, many credit unions still offer free checking accounts. Some even have rewards checking accounts as well, which are practically an endangered species at large banks.
But with many large banks backing away from some of the new fees, it is not unreasonable to ask your current bank to reduce or waive any other new fees that have appeared on your accounts. In light of recent events, they might be in the mood to do this in exchange for keeping you as a customer.