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CU System
CUs shine with free checking big banks back away
CHICAGO (8/31/11)--While free checking is an endangered species at most large banks, credit unions continue to shine in this area,
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beating both big and small banks with their steadfastness to maintaining free checking for members, according to data from a study by a Chicago-based pricing research firm. Today, 78.6% of credit unions offer free checking--more than twice that of large banks with $50 billion or more in assets and more than community banks, says Moebs Services (American Banker Aug. 30). In 2009, roughly 96% of the big banks some form of free checking, although many had attached strings such as high minimum balances. Today, only 34.6% of big banks do. Nearly two-thirds of big banks have eliminated these services by adding fees or changing deposit account terms, said the research firm. Compare that with credit unions. In 2009, said the Moebs research, 85% of credit unions offered free checking. Today 78.6% do. Even smaller community banks are starting to cut their free checking offerings. In 2009, 78% of these banks offered the service; today, 70.8% do--a 7.2-point drop. While they would lose accounts if they started charging fees, the topic is on their board tables for discussion and some have adopted a wait-and-see strategy, according to the article. It notes that for smaller institutions, "charging new fees could be tantamount to suicide." Offering free checking is an opportunity for credit unions to differentiate themselves from large financial institutions, Marcus Schaefer, CEO of Truliant FCU, Winston-Salem, N.C., pointed out in the article. Truliant has no plans to charge for checking. Charging would be a last resort. Moebs Services blames the trend to cut free checking on a 2009 regulation that restricts banks' abilities to charge overdraft fees to help subsidize free checking. Other sources interviewed say banks are trying to offset revenue losses from the Dodd Frank Act's restrictions on debit interchange fees by starting to charge checking fees.


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