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Banks to hike rates opportunity for CUs says PCUA
HARRISBURG, Pa. (2/11/08)--Credit unions, get ready to take advantage of an opportunity. Many banks have started raising fees on their services to offset losses from the collapsing real estate market. Banks will want to make up the income and will be much more aggressive at raising prices, according to William McCracken of Synergistics Research. Everyone will see some price increase unless they have perfect credit, he told USA Today (Feb. 7). That means an opportunity for credit unions to step in and provide services, according to the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Feb. 8). "This presents an opportune time for credit unions to promote their services and low rates and fees to attract new members and build member loyalty through account relationships," said PCUA in its newsletter. Bank of America says it is raising rates on some card accounts based on a periodic review of consumers' risks, reported USA Today. Other banks are raising rates on some credit cards, boosting late fees, lifting caps on balance-transfer fees and increasing ATM fees for foreign transactions. Lenders collected $18.1 billion in penalty fees last year--on credit cards alone, a 69% increase since 2003, consulting firm R.K. Hammer told the newspaper. The fees likely will increase an additional 5.5% this year because many consumers struggling to pay bills are hit with late fees. For an example of how credit unions can take hold of the opportunity, ready "Fairwinds' expansion result of 'flight to quality'" in System News.
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