I read an article about banks and fees and I thought to myself “My my look at those snakes scramble!”
Did you know that there are close to fifty fees that banks can charge its customers?
For example, banks generate substantial revenues from interchange fees it charges to retailers for debit transactions. These fees are something that customers never really paid attention to because the fees were imposed on the retailer.
But with the new regulations, the fees banks can charge for retailers will reduce from 44 cents to a cap of only 24 cents.
As a result banks will lose billions of dollars in revenues every time a customer swipes a card. With lost revenues banks will focus on ways to recapture those monies in order to satisfy its shareholders.
It’s important to realize that banks are for-profit financial institutions, owned by shareholders, not customers of the bank. Its primary goal is to generate profits which are returned to its shareholders in the form of dividends.
In order to make up for those lost revenues banks are trying to introduce new fees at the expense of its customers.
For example, Bank of America recently tried to impose a $5 monthly fee for customers who use their debit cards. But with the entire backlash all across the country and thousands fleeing to credit unions it recently decided to drop the debit card fees and abandon that idea.
Credit unions have become a safe haven for many consumers because it is member-owned and member operated. It is a collaborative, not-for-profit financial institution formed to supply credit to its members who are also its customers.
The chart below shows a direct comparison between credit unions and banks:
|Returns profits to members with lower loan rates, higher savings rates, and free or low-cost services.||Returns profits to shareholders|
|Each depositor is a member with share of ownership.||Customers have no ownership in the corporation.|
|Members elect a volunteer Board of Directors||Controlled by shareholders and paid officials|
|Federally insured by the National Credit Union Administration or a private insurer.||Are federally insured by the FDIC|
|Can serve only those people within their field of membership.||Can serve anyone in the general public.|
Credit unions are such an attractive option because its first priority is to serve the needs of its members rather than to make a profit for shareholders. Because of this focus it is able to keep interest rates on deposits higher, and loan rates and fees lower.
As a result credit union members on a national scale save $6.3 billion a year by using a credit union instead of a bank.
Did you know that two-thirds of big banks have eliminated free checking?
A movement has begun encouraging consumers to transfer money away from those mega-banks toward credit unions. Despite the fact that major banks such as Wells Fargo and Chase have also suspended its pilot debit card fee programs the momentum clearly hasn’t stopped.
While banks will continue to introduce new types of fees to recoup loss revenues, credit unions are still preserving its low costs and low rates causing customers to say “Hasta La Vista” to their banks.