Deposit Rates Could Turn Negative in This Bizarro World
Forget the debate over whether or not a credit union should keep offering free checking accounts, there are signs credit unions may eventually have to decide whether or not to charge their members fees for holding deposits.
The reasons why they might have to take this step rests in the upside down finances that characterize the U.S. economy right now, where the costs of liquidity are so low as to almost be free, but the demand for loans and investment returns remain so soft they bring in almost no income.
Donna LoStocco, vice president of member experience at Affinity Credit Union, a 140,000-member credit union headquartered in Basking Ridge, N.J., acknowledged that the front-line staff at the credit union had been aware of the problem for some time.
“You don't want to dread the member that comes in with a million dollar deposit, but you do become more aware of it,” she said. The $2 billion credit union had roughly $733 million in its regular share and share certificate accounts as of the end of June, according to NCUA records.