Durbin Criticizes Credit Unions and Banks for Raising Card Fees
Senate Majority Whip Richard Durbin took to the Senate floor this week to criticize credit unions and banks for fee increases since last year's enactment of the CARD Act.
"Credit unions, which are often viewed as the hometown, small town mom-and-pop, closest to the people, your best friends when it comes to banking--listen to this: At credit unions, annual fees soared 67% in that same period [from July 2009 to March 2010] to $25. During the same period, the median cash-advance and balance-transfer fees jumped by 33 percent,'' Durbin (D-Ill.) said on Tuesday.
"It isn't just a matter of raising fees; it turns out they are raising them at a gallop, at a fast rate, trying to get ahead of the credit card reform bill.'' he added.
Durbin, who cited a study from the Pew Charitable Trust, noted that banks had raised their annual fees on cards to an average of $59.
Officials of the two credit union trade associations said the fee increases are needed to offset the additional compliance costs.
"The rates went up to cover the regulatory burden. That burden is especially high on smaller institutions like credit unions. It's easier for big banks to implement changes because of economies of scale,'' said NAFCU Executive Vice President Dan Berger.
He also noted that only 14% of cards issued by credit unions have annual fees, so for 86% of all the cards issued by credit unions there were no annual fee increases.
CUNA President/CEO Bill Cheney noted in a letter to Durbin that credit unions raised fees at a lower rate than did banks on most card-related costs. He wrote that "(I)nstead of being criticized for accounting for the impact of newly enacted legislation, credit unions should be commended for all they have done to keep costs down.''