How Credit Unions Can Win the Fees Fight

By Robert McGarvey

Want to pick a fight you should win? Everytime? Even when battling the biggest banks?

That’s a real probability for credit unions that pounce on an opportunity that could bring them notice of their generally lower fees by consumers hunting for a financial institution that clicks exactly that box.

Surf over to TrueFees and ponder the possibilities. Founder Ben Premo is building out a consumer facing search site where consumers in many cases would find their better deal will be a credit union and that is because Premo lets the consumer search for a financial institution by any of 10 different fees, from monthly service fees to overdraft fees, even foreign wire transfers.

Premo said that when he’s looked for that info on financial institution websites, maybe half of the banks he’s investigated did not post that info or if they did, it wasn’t readily visible.

Credit unions – most of which still offer free checking – are much more transparent about their fees or lack thereof.  But even credit unions may be less than forthcoming about fees for wire transfers, cashier’s checks, and similar.

So he set about building TrueFees where a consumer can input a zipcode and be shown the institutions with the best deals.

He also said he is looking for credit unions that want to partner with him, paying a fee only when a consumer actually opens an account.  There’s no charge to get entered into the database. “Truefees will bring exposure to financial institutions with low charges,” says Premo.

Right now, digital only banks are the primary players at TrueFees but Premo is insistent he wants to change that by adding info about more credit unions.

That is a possible way to change today’s playing field which is one where the big institutions generally win.

Most new checking accounts open at the predictable, mammoth institutions, the ones with big marketing budgets and lots of TV advertising.  Are they the best deal for an average consumer?

Absolutely not, certainly not for the 98% of us.  

At Chase, Total Checking costs $12 monthly. It can be free if the consumer maintains a checking balance that never dips below $1500, or $5000 in linked accounts (such as savings).  That sounds good until you remember that four in five of us say they live paycheck to paycheck.  You might as well tell them the minimum balance for free checking is $1 million.  They can’t manage $1500 any better than that million.

The consumer’s best chance at free checking with Chase is to arrange a recurring automatic deposit of at least $500 monthly. That will do it. But not everybody has an employer or similar willing to play along.  

So get ready to pony up $12 monthly.

At Affinity Federal Credit Union in New Jersey – where I do most of my checking – a checking account is free. No minimum balance required.  

At Chase the overdraft fee is $34.  Affinity charges $33.

But a growing number of digital banks and some credit unions, said Premo, charge nothing or a nominal fee for overdrafts.  If overdrafts are a personal problem, look for a provider with small or no fees and that’s where the TrueFees search tool will prove valuable.

Don’t be shy, either.  In 2017, overdraft fees paid by Americans hit $34.3 billion – that’s billions. It’s money that does not need to be spent.  (Grain Technology, by the way, has a tool that could absolutely end overdrafts. Hear the podcast here.)

Fee specificity, by the way, is an obvious hook for TrueFees: the consumer can drill down to exactly what fees interest him/her. Personally I have never wired money abroad so fees for that are inconsequential to me but for those who regularly wire money abroad – and I know people who do that to India, the Philippines, Mexico, and in years past, Ireland – it’s potentially easy to hunt for nearby institutions with attractive charges for foreign wires.

A plus for the consumer who uses TrueFees to find and open a new account is that TrueFees will put a $25 bonus in the consumer’s pocket.

Check out TrueFees. It just may be a smart way to find a game where credit unions are destined to win because most truly offer the better deal.

A CU2.0 podcast with Ben Premo where he talks at length about TrueFees posts in mid May 2019. Find it here.