Bank Fees Are a Credit Union’s Best Friend

Something is wrong when keeping cash in the kitchen cookie jar seems a reasonable substitute for your bank. It may feel rebellious -- your own little Occupy Wall Street act of defiance -- and even a bit savvy, given those checking-account fees, ATM fees, and monthly debit-account fees. That little depository institution atop your kitchen counter has big drawbacks, however, including a lack of federal deposit insurance, zero interest, and ease of access that could prove dangerous to your financial health.

There is a way to fire up both your rebellious spirit and your savings. On Nov. 5 -- the day Occupy Wall Street has already targeted for supporters to leave banks en masse -- consider one of the nation's 7,000-plus credit unions. Thanks to their structure as not-for-profits, they are typically fee-friendlier than banks, and becoming a member is usually much easier than you may think.

Consumers are taking notice. The Navy Federal Credit Union, the nation’s largest, says it is on pace to see a 23% increase in checking accounts this year, compared to more typical annual growth rate of about 7%. “The past few months have been the highest in terms of new account openings we’ve ever seen,” says NFCU spokesperson Aisha Rasul. Rethinking Debit Fees

Banks don't want to see customers march out the door. Some are rethinking plans for monthly debit-card fees and even offering free checking. It's getting tougher, though, to qualify for such perks.The percentage of banks offering free checking has fallen from 76 percent two years ago to 45 percent, and the average monthly fee is $14. (You can often circumvent such fees if you have a mortgage or other business at the bank.) The typical balance to get that fee waived is $5,587, compared to less than $4,000 a year ago. For those with monthly balances below $1,500 in a basic checking account -- or a basic checking account linked to a basic savings account -- Citbank plans to charge $10 per month starting in December. Consumers can have the fee waived if they have monthly direct deposit and pay at least one bill online each month.

Among large credit unions, meanwhile, three out of four institutions surveyed by Bankrate.com offer free checking. An additional 20 percent waive the fee if you sign up for monthly direct deposit or meet some other requirement, such as a minimum balance. Credit union minimum balances for free checking are typically $500 or less. Pat Keefe, spokesman for the Credit Union National Association, adds that about 90 percent of credit unions don't impose debit-card fees.

Credit unions have other charms that can make you feel like a privileged client. Ken Tumin runs the Depositaccounts.com website, which has a searchable database of bank and credit union account offerings. He says many offer reward checking accounts: With a low minimum balance, you can earn a competitive interest rate if you agree to frequently use your debit card or have a monthly direct deposit into the account. A half-dozen credit unions in the database pay at least 2 percent on reward checking account balances, up to the first $15,000 or so. Better Rates
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