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The financial services industry and particularly credit unions are at a crossroads right now. Many toss the term crossroads around every time a tweak occurs, but current circumstances are exactly what the word was created for. Some things will need to change or credit unions will cease to exist.

First and foremost, credit unions’ overreliance on fee income must come to an end. Not only will fees charged to members likely be regulated away, it’s also not in keeping with the credit union philosophy. Fees such as overdrafts punish members for their missteps; instead, credit unions can grant a small line of credit attached to the checking account that charges a modest interest rate. Credit unions’ fee income increased from $6.9 billion in 2008 to $7.1 billion in 2009, or 3%, according to consultant Tony Ward-Smith.

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Peter Westerman

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Credit Union Times

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