Price of Staying Competitive on Fees
After reading the March 31 Editor-in-Chief's column, thought I would respond to what was said about increases in fee income as well as operating expenses.
As stated, credit unions receive interchange income from debit card transactions. We are a very small ($11 million) credit union and receive gross interchange income of around $3,000 a month. Our debit card expenses for processing, fraud and other cost are over $3,000 a month. We figure we just about break-even and give our members a nice service (until a fiasco like Heartland comes along and our operating expenses for losses go through the roof-but, I am not talking about that here).
Our fee income without interchange is $7,000-including interchange income increases our fee income about 40%. We have actually reduced our members' fees, but it does not look that way. In addition, our operating expenses are up over $3,000 as well for those debit card expenses, which means it looks like we are spending additional monies, when, in reality, it is just the increases in debit card use.
When I came to this credit union 15 years ago, we charged an annual Visa fee of $10 and a monthly checking account fee of $5. Today, we would make $90,400 annually on those two fees alone. But we eliminated both of the fees to keep competitive, and other fees have taken their place. I honestly believe we would be in better shape financially if we went back to checking and annual Visa fees and got rid of everything else, but that is just my opinion.
Cal Poly Federal Credit Union