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IReutersI INYTimesI note CUs are bank-fee alternatives
MADISON, Wis. (10/18/11)--While everyone tries to figure out exactly how many people are switching their accounts to credit unions and community banks because of the big banks' debit card fees, big name media such as Reuters and The New York Times continue to report credit unions as an alternative for consumers fed up with fees. Reuters Monday included credit unions in its report about alternative lenders that are gaining traction as banks turn off the tap for cash and start charging fees for services consumers are used to getting for free. The article, "Analysis: As banks squeeze, alternative lenders gain traction," centers on what will happen to nearly one-fifth of the adult American population--60 million consumers--who were either underbanked or unbanked in 2009. "That number is likely to rise as banks choke off free checking, and adjust to new rules that cut into their revenue," said Reuters (Oct. 17). Enter credit unions. "Credit unions are an alternative source for the kind of services a bank provides," Professor Lawrence White Stern School of Business in New York, told Reuters. "Credit unions, which are effectively not-for-profit cooperatives, are stepping up to offer cheaper alternatives to the short-term, high interest loans provided by payday lenders," said Reuters, noting that demand for short-term, small dollar loans from credit unions rose 52% during second quarter. Reuters cites aggressive campaigns such as Livonia, Mich.-based Co-op Services CU's "Shred My Card" campaign, which offers $105 to anyone who opens a free checking account with a direct deposit or who cuts up their bank card. "We want consumers to know they can fight back against big banks by saying 'no' to more fees," said Credit Union National Association President/CEO Bill Cheney in the article. The article also mentioned that credit unions are lobbying in Congress to have their member business lending cap lifted to 27.5% of assets from 12.25%. The New York Times article, "Online Banking Keeps Customers on Hook for Fees," discusses how banks' online bill paying services have created "powerful tethers" that make it more difficult to switch to another financial institution. That has emboldened the big banks to turn to new fees as other revenue sources dry up, said the Times (Oct. 15). A marketing study commissioned by Fiserv has indicated using the Internet to pay bills, perform automatic deductions and send electronic checks has cut customer turnover for banks by 95% in some cases, said the article. This has spurred a measure in Congress to make it easier for consumers to switch financial institutions, and prompted lawmakers to ask the Department of Justice to investigate whether banks are colluding on the fees they set. The Times article also acknowledges the consumer backlash to debit card fees and the Occupy Wall Street protests, which have focused on debit card fees as another example of corporate greed. It noted that "activists are calling on account holders to switch to nonprofit credit unions en masse on Nov. 5," Bank Transfer Day. A Facebook page devoted to the effort has drawn more than 38,000 supporters, said the Times.
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