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WASHINGTON-In the wake of the release of the Federal Reserve’s banking fee study, credit union economists are predicting that credit unions are still a better deal for consumers than banks. Currently, credit unions are not included in the Fed’s survey, but both CUNA and NAFCU expect to have their own numbers out shortly. CUNA Chief Economist Bill Hampel promised to have information out on credit union fees within the next three to four weeks. He pointed out, however, that their information is more directed towards helping credit unions price their products and that different wordings of questions may not allow for accurate comparisons between CUNA’s data and the Fed’s survey. “We have always conducted a fee survey in the past.The trouble is it’s difficult to have apple to apple comparisons. We could maybe get as close as Macintosh to Granny Smith,” he explained. NAFCU Economist Jeff Taylor said that he expects to have similar data for federal credit unions in the next couple of months in the organization’s Flash Report. The Fed is required every year since 1989 by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) to report to Congress on changes in the cost and availability of banking services. When this directive to the Fed expired last year, it was only reinstated for one more year. H.R. 974, Small Business Interest Checking Act of 2001, has already passed the House. Its sister legislation, S. 524, has sat in the hands of the Senate Banking Committee since April 4. Action is expected before the end of the congressional session. Both CUNA and NAFCU support the legislation to include credit unions in the study. Not only would it make comparisons easier, the two groups contend, but news reports on the study would show consumers the value of joining a credit union. NAFCU Communications Manager John Zimmerman remarked that credit unions are constantly saying that “credit unions are a great deal for consumers compared to banks.” Taylor chimed in that with the Fed’s data, “There will be empirical information to back that [statement] up.” Both groups also emphasized that charging for providing a service is perfectly acceptable. One of the things to realize about charging fees is, I don’t think any business would doubt about charging fees. Banks just want to charge as much as they can for that service for that customer,” NAFCU Chief Economist Tun Wai said. He added that cooperatives are more likely to “share the cost of providing services.” “There is nothing wrong with financial institutions charging fees. It’s just nice if they’re done in a rational.way,” Hampel agreed. Study results The Federal Reserve’s Annual Report to the Congress on Retail Fees and Services of Depository Institutions found that across 15 categories, availability of services increased significantly in three while decreasing in one category. Also during the period of the study, the level of the fees charged at banks and savings institutions increased significantly in seven of the 15 categories and dropped in one. According to the Federal Reserve’s fee study for 2000, bank customers are `paying’ more for `free’ checking than last year. The number of banks and savings institutions offering free checking accounts nearly doubled from 13.6% in 1999 to 26.6% for 2000, the survey found. However, the necessary minimum balance to open one of these accounts rose from $41.87 in 1999 to $59.01 in 2000. Additionally, the survey found a fee based account with no minimum balance and sometimes a per check charge as the most popular type of account at banks and savings institutions-41.0% offer them-increased their monthly fee to $5.12, $0.17 over the previous year. The minimum balance to open one also increased to $63.17 last year, or up $2.19. While the average per check charge dropped $.07 to $.32, the percentage charging a fee per check jumped 3.7% last year over 1999. The single-balance, single-fee account requires customers to maintain a monthly minimum balance or pay a fee. These type of accounts increase slightly from 37.2% of banks and savings institutions offering them in 1999, to 38.1% in 2000. Here the monthly fee for a low balance increased $1.00, from $6.17 to $7.17, which the study considered significant. However, the average minimum balance to avoid paying the fee fell from $517.72 to $486.21. But, again in the negative for banks and savings institutions, the minimum balance to open one of these accounts jumped from$109.05 in 1999 to $154.51 in 2000. Under the category of special fees, the trend is definitely upward. Banks also increased the charges on deposit items returned by $.68 and, at the same time, 11.7% more institutions started charging in this situation for a total of 72.2% charging fees for deposit items returned. While 0.8% less banks charge for stop payment orders, the 99% that still do charge increased their fees by $2.28 to $17.54. All banks and savings institutions began charging for nonsufficient funds (NSF) checks last year, up insignificantly from 99.9% in 1999. However, NSF fees increased by $2.34 to $20.22 in 2000. Additionally, overdraft fees increased from $17.66 in 1999 to $19.78 in 2000, for a difference of $2.12. There is some good news from banks in the automated teller machine (ATM) arena. The number of banks surcharging at ATMs dropped 6.2% to 75.3% in 2000, while the average surcharge of $1.25 remained unchanged. According to the survey, fewer banks are charging an annual fee for ATM usage (13.4% in 2000, down from 16.2% in 1999). Also the number of banks charging an ATM card fee dropped 1.6% to 6.1% for 2000. However, those banks still assessing these charges have upped the ante; average annual fees rose $2.79 to $10.76 for 2000 and the average card fee jumped from $4.16 in 1999 to $6.51 in 2000. An increase occurred in the percentage of banks charging customers to use the banks ATMs (6.3% in 2000, up 0.7% from the previous year). More banks also charged customers for using other bank’s ATMs, which totaled 72.7% in 2000, up from an even 72% in 1999. The average fees associated with this type transaction fell a penny to $1.16 in 2000. While new credit union data is expected out in the near future, the most up-to-date data available at press time was from CUNA dated November 1999. Nearly two years ago, credit unions were charging a monthly fee for a regular checking account of $4.28 compared to the banks’ $6.72. Credit unions also required only a $446 balance to avoid these fees, while banks required $537 in the bank. Additionally, credit unions charged an average of $.05 per check with 13 free checks. Banks were charging $.08 a check after the first 12 checks. In 1999, credit unions charged an average of $15.48 for a bounced check, while banks $17.01. Credit unions also surcharged only $.23 at the ATM, while banks averaged $.97. [email protected]

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