Originally created 02/08/98

Banks charge more, higher fees than credit unions, groups say

WASHINGTON -- Banks charge more fees and higher ones than credit unions on checking accounts and most other services -- excluding ATM fees, the Consumer Federation of America and a credit union group found in a survey.

A banking industry representative said the survey was weighted toward smaller credit unions, making for unfair comparisons, and that credit unions generally are able to charge lower fees because they are exempt from paying taxes.

The survey, released Tuesday by the consumer group and the Credit Union National Association, was the latest volley in the credit unions' months-long fight against banks, which they have portrayed as a David vs. Goliath contest.

In a case affecting millions of credit union members across the nation, the Supreme Court is expected to rule soon on a new restriction on who is eligible to join federally chartered credit unions. Legislation pending in the House would overturn the restriction, by allowing federal credit unions to continue to include more than one group in their memberships.

Less than half the nation's households currently are eligible to join a credit union, Stephen Brobeck, executive director of the Consumer Federation, told a news conference.

"The banks are trying to put us out of business," said Daniel Mica, CUNA's president and chief executive officer. He called credit unions, which represent 7 percent of the financial services market, "a life jacket for American consumers."

Brobeck said "most consumers pay far less" at credit unions than banks and savings and loans in fees on checking accounts and most other charges. Notable exceptions are fees for using automated teller machines and renting safe deposit boxes, which he said run about the same at banks and credit unions.

Brobeck also said smaller banks generally charge less than bigger ones.

The survey, based on 1994-97 data gathered by CUNA and Sheshunoff Information Services, a bank and S&L analysis firm, found that:

-- Banks are more likely than credit unions to charge fees for most services.

It said the difference is especially striking for no-frills "economy" checking accounts, which sometimes limit the number of checks that can be written each month, for which 86 percent of banks charge monthly fees compared with only 15 percent of credit unions.

-- Fees on checking accounts in general are 30 percent to 40 percent lower at credit unions than banks, while fees for money orders and certified checks are 55 percent to 65 percent lower.

The average monthly fee for an "economy" checking account was $3.11 at credit unions and $3.69 at banks. For regular checking it was $4.29 and $6, respectively, and for interest-bearing checking it was $4.56 and $7.71, respectively.

-- Over the past three years, fees for most services have risen less rapidly at credit unions than at banks.

But an economist for the American Bankers Association, the industry's largest lobbying group, said the survey -- based on a random sample of 2,000 of the nation's 11,500 credit unions -- was unfairly weighted toward smaller credit unions that charge less.

Fees charged by bigger credit unions are similar to those levied by banks, said James Chessen, chief economist for the bankers' group. The larger credit unions "are very aggressive and profit-oriented, and they are competing head-to-head with banks," he said.

In addition, Chessen said, the credit unions' tax-exempt status gives them a "huge taxpayer subsidy" that enables them to charge lower fees.


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