Minnesota Credit Union Network Survey Refutes Inaccurate Stats Published in Local Newspaper
MINNEAPOLIS - The Minnesota Credit Union Network is using findings from a survey it conducted to refute an article published in the July 18 edition of the Minneapolis Star Tribune that asserted that small banks and local credit unions are "costlier" than U.S. Bank. A counter op ed piece authored...
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MINNEAPOLIS – The Minnesota Credit Union Network is using findings from a survey it conducted to refute an article published in the July 18 edition of the Minneapolis Star Tribune that asserted that small banks and local credit unions are “costlier” than U.S. Bank. A counter op ed piece authored by MCUN President/CEO Kevin Chandler that ran in the Aug. 2 edition of the newspaper showed figures proving the opposite is true. The July 18th article by Star Tribune staff writer Chris Serres – “More Bank for the Buck; A flurry of big bank mergers brought fears of cold, Scrooge-like service to customers. A reality check reveals just the opposite: Big banks are competing hard in the customer service game” – read that: “The rash of acquisitions and megamergers in the banking industry was supposed to lead to reduced competition, declining service and higher fees. Consumer advocates predicted a mass movement of deposits from large regional and national banks to smaller institutions, such as community banks and credit unions, that emphasize service. But there is mounting evidence that big banks might be getting a bad rap. Minnesota’s largest banks have lengthened their hours, rearranged their branches to reduce teller lines, designed new systems for measuring customer service and eliminated fees for a wide range of services.Consumers who think they might be getting a better deal at a community bank or credit union could be in for a surprise.” Serres continued to write that: “For careless customers, a big bank might not be the best deal. Large banks tend to charge much higher “sin fees,” so someone who frequently bounces checks or withdraws money from other banks’ ATMs can pay hundreds of dollars more per year at a large bank than a credit unions. But a fastidious consumer could actually come out ahead at a large bank.” The Star Tribune staff writer cited by example, a customer who annually bounces two checks, needs one stop payment order and doesn’t maintain a minimum account balance. The customer also orders a box of checks, two cashier’s checks, and pays bills online. According to Serres, this customer would pay 48% less in annual fees at U.S. Bank than at Twin City Co-Ops FCU because “U.S. Bank, like many of its big-bank counterparts, no longer charges a monthly maintenance fee for its checking account.” U.S. Bank’s Internet bill payment service is also free, he writes, “while most credit unions that offer online service still charge $4 to $6 a month.” “Still, consumer advocacy groups continue to criticize big banks for using their clout to gouge customers – especially low-income people – with sin fees.,” he wrote. Serres interviewed and quoted American Banker Association Senior Economist Keith Leggett in his article who stated that, “Most people are better at managing their money than these consumer advocacy groups may think. If someone is living life close to the edge then, yes, they may pay more [in fees]. But if you do everything right, you can come out ahead” at a large bank. In his article, Serres cited as a source for some of his bank figures a 2003 Federal Reserve study, but he didn’t name the source for his statement concerning Twin City Co-ops FCU. Chandler said he also queried Serres about that when he talked with him about his article. “I assume he went on their Web site and saw their rates,” said Chandler who also talked with the credit union’s director of marketing Scott Jax who told the MCUN president that he never was interviewed by Serres. But Serres told Credit Union Times he called Twin City Co-ops and spoke with a customer service representative who gave him the rates for the credit union. MCUN’s survey findings were based on the responses from 100 CUs statewide the organization collected on July 19 to form the credit union base average – Chandler pointed out that the response rate was “great” considering there are only 175 CUs in the state. Mirroring the analysis done by the newspaper, MCUN looked at financial institutions’ various fees and costs, including maintenance fees, bounced check fees, stop-payment orders, boxes of checks, cashier’s checks, ATM withdrawal costs and Internet bill pay. According to the MCUN, results of the survey showed CUs’ costs to be lower in all cases. “I realized very quickly that the fees Serres cited in his article seemed way out of line. I also showed the numbers to other credit union CEOs and they agreed when they crunch the numbers at their own credit unions that Serres seemed high. “But this really has nothing to do with Twin City,” Chandler continued. “You can cherry pick all you want to make a credit union look bad. The big picture is what’s important, and that is that credit unions have lower fees and better returns on savings.” Chandler speculated that the fact that the Minnesota Bankers Association recently held their annual convention “might have had something to do” with the Star Tribune running Serres’ article. But Serres told Credit Union Times he was not pressured by any banking group to write the article. “Consumer advocacy groups such as Public Interest Research Group (PIRG) for years have made a big deal about bank fees, but I noticed they were unusually quiet about it this year. When I called one of the groups and inquired, they told me they didn’t consider it an issue anymore and had moved on to other things because many banks had lowered their fees and were providing better service. So that planted a seed in my mind to do the article,” he explained. Serres also stressed that the intention of his article wasn’t to beat up on credit unions or community banks. Instead, he said, “I just wanted to give credit where it is due to the big banks for the progress they’ve made with services and fees.” Serres said he thought Chandler’s column was “well written and made our readers more informed than they were based on what they read in my article. I give him full credit for what he did, going out and talking with his members.” In addition to refuting Serres’ article’s inaccuracies, Chandler used his op ed as an opportunity to educate readers on the credit union difference. “Bank customers would be wise to join a credit union and get great service, lower fees, better rates on savings and lower rates on loans. Now that’s what I call a better deal,” he wrote in conclusion. -
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