Credit unions have been handed "a tremendous opportunity" to gain new market share as a result of those continuing reports of big banks dropping free checking, the head of New Jersey's second largest CU, the $1.5 billion Merck Employees Federal, said Wednesday.
Despite the grave industry concern over the fallout from the Federal Reserve interchange rules, the banks' exit from free checking "is indeed good news," said Ray Del Nero in commenting on reports in New Jersey that both Wells Fargo and Chase Bank will start phasing out free checking in the Garden State next month.
Based on the news accounts, it was not entirely clear, Del Nero said, if the end of free checking was linked to the banks' loss of overdraft income or some other reason.
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The Newark Star Ledger said Wells Fargo, which acquired Wachovia Bank two years ago, plans to end free checking for New Jersey customers when they convert to Wells Fargo, though existing Wachovia customers can continue free checking for another year.
The Star Ledger article also quoted the president of the New Jersey Bankers Association, John McWeeney Jr., as stating that the trend in financial services "is moving away from free checking."
At Rahway-based Merck, Del Nero said the CU members "get all of their checking services for free, there are no minimums and no criteria."
As for future Merck policies on checking, Del Nero said much depends on "what is done with debit cards and the Fed and we all would have to program for that."
Del Nero said for now the industry is poised to challenge the Fed rules, citing CUNA's aggressive "Call to Action" program to lobby lawmakers and regulators this month.
Separately, the New Jersey Credit Union League said an e-mail survey it took of member opinion in December found that 68% of respondents said they would be offering a free checking account in 2011 with 15% saying it would be with restrictions.
Three percent of the sampling said they would not be offering it and 3% said they would never offer it.
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