Banker fee survey misleading, says CUNA

WASHINGTON (8/23/07)—With mounting pressure from consumer press urging people to "ditch your bank" to avoid burdensome and unnecessary fees, it is not surprising that a banker-sponsored report claims fewer consumers are paying any bank fees, according to the Credit Union National Association (CUNA).

"The American Bankers Association's assertions just do not jibe with the reality faced daily by the American public. The only thing this survey proves is that consumers don't know how much they're being gouged by banks," said CUNA President/CEO Dan Mica Thursday.

"The survey results are based on the impressions of consumers of how much they pay in banks fees—not on hard data gathered from the banks themselves. I have to question whether the results truly speak to consumers' bank-fee experience or to the all-too-hidden nature of a lot a bank fees," Mica added.

CUNA's Mike Schenk, vice president of economics and statistics, said of the bankers' survey that the "proof is in the pudding." Schenk cited recently released June 2007 banking industry data from the Federal Deposit Insurance Corp. that shows banking institutions are on pace to exceed the 2006 record level of service charges. Deposit account fee income is projected to jump to $38 billion in 2007.

Schenk noted the following figures: In 2006 U.S. banks reported a record $36 billion in service charges on deposit accounts, which works out to roughly $360 in yearly charges for each household with a bank relationship.

"While businesses pay some fees, the $36 billion total ignores many consumer fees--including all loan fees, such as origination fees, late payment fees, and more. And these loan-related fees account for a large percentage of total bank fee income," he said.

Also notable, said CUNA's CEO Mica, is the ABA statement congratulating bank customers for being "smart shoppers" for financial services and thereby keeping their fee costs down.

"The irony of this statement is rich. While the bankers are on Capitol Hill pleading with lawmakers to block fair competition by credit unions, farm credit lenders and others, they acknowledge that it is competition that helps keep consumer costs down," Mica said.

"I think that doublespeak says it all."

The annual survey of 1,000 consumers, conducted for ABA by Ipsos Reidin July, asked respondents to estimate how much they spend on fees for banking services each month, such as checking account maintenance and ATM access.

The ABA reported that of those responding:

• 52% said they pay nothing;
• 13% said $3 or less;
• 9% said they spend between $3-$6;
• 3% said between $6-$8;
• 5% said $8-$10; and
• 13% said they pay more than $10.

Among recent consumer-oriented articles noting high bank fees was Liz Pulliam Weston's piece, "Ditch Your Bank for a Credit Union," published on MSN.com.

That article provided a direct link to the California CU League's CU MatchUp website, and the web server crashed as a result of the high traffic.

Pulliam Weston advised readers that if they were sick of getting hit with fees, earning poor interest rates and being treated like a "nuisance" by their bank, it was time to leave and join a credit union.

The article listed several distinctions between credit unions and banks, including these three: credit unions are member-owned, credit unions are not for profit, and banks hate credit unions, largely because credit unions are exempt from many state and federal taxes.

Resource Links

Keep the Difference: Credit Union Fees vs. Bank Fees