2011: The Year Of The Fee For All?
HOUSTON-From one analyst's perspecitve, 2011 is the year in which CUs must accept the fact they will have to start charging more fees to remain profitable and grow-but they must do so while also giving members something in return for the extra costs.
Strunk and Associates sees free checking as the first product CUs need to focus on (Credit Union Journal, Jan. 3). CEO Mike Sobba believes a package of services-including cash-back rewards cards-is what will make a checking fee palatable to members. "The whole premise, and we have done research, is we don't think consumers are opposed to spending $5 to $7 a month to save 50 cents a gallon at the gas pump and get identity theft protection," Sobba said.
Strunk & Associates is offering a new checking package, called Preferred Checking, that offers 20% cash back gift cards at Shell, BP, Exxon/Mobil, Home Depot, Lowes, Pizza Hut, Outback Steakhouse, Burger King, Old Navy, Olive Garden, Sears, Applebee's, Target, JC Penney, and other large well-known retailers. The consumer also gets $10,000 in AD&D insurance, ID theft restoration services, travel assistant services, and other travel, shopping, and entertainment discounts. Strunk & Associates is partnering with The Sisk Company, Fort Worth, Texas, on the package.
Sobba contended that 2011 is the year in which credit unions must pay greater attention to unprofitable members "You have to cross sell them something these members will be willing to pay for."
Sobba believes CUs will get a boost from big banks that are preparing to charge between $25 to $30 for a debit card. "Give consumers something in return for a small fee. Look at what movie theaters do. It's $10 for a ticket, $20 if you bring someone, and then $18 for popcorn and Cokes. That's $38. But the theaters' parking lots are full. That goes to show that if businesses-credit unions-can identify what consumers want, they will pay for it."