NEW YORK—Credit unions are more than twice as likely than banks to offer free checking to a consumer who is new to the organization, a new study shows.
Bankrate.com surveyed the nation’s 50 largest credit unions and found that 76% of their checking accounts are free–meaning no service fees or per-transaction charges regardless of balance or activity. Only 37% of banks can say the same, the company stated. In 2010, 78% of credit unions and 65% of banks offered free checking accounts to everyone.
“At a time when free checking has become increasingly rare at large banks, it is still very prevalent among credit unions,” said Greg McBride, Bankrate.com’s chief financial analyst.
The average credit union overdraft fee is $27, but less than the $33 average found at banks, according to Bankrate.com. Credit unions’ ATM fees are friendlier; 34% have no fee for going outside the network, or at least one free out-of-network withdrawal per week.
Additional study findings:
- None of the credit unions that Bankrate.com surveyed require more than $100 to open an account and 66% have no minimum.
- Surcharging non-members for using a credit union’s ATM is nearly universal, with 96% of credit unions doing so. The most common fee is $3—same as at banks.
- Just 38% of the credit union checking accounts surveyed pay interest. Of those, the most common yield is 0.05%.
Free Checking Boosts Membership
NAFCU reminded that credit unions have capitalized on their lower fees--a big reason why CU membership has reached a record 102 million.
"Free checking has always been part of the business model credit unions have had around the country, and I think you'll continue to see that. I think it is one of the differentiators between credit unions and banks," said Dan Berger, NAFCU president and CEO. "Coming out of the financial crisis and all the black eyes that the big investment banks got on Wall Street, I think people are really beginning to focus on their financial well-being, and because we're not-for-profit financial institutions, consumers are gravitating toward credit unions."