CUs Mull Cutting High Interest Checking
BATON ROUGE, La.-Rates and terms for high-interest checking accounts could be on the chopping block thanks to the proposed interchange cuts.
Jeffrey Conrad, CEO, of the $181-million Pelican State CU, told Credit Union Journal that his asset/liability team may have to "crunch the numbers" to determine changes it could make to its e-Xtra Bonus Checking that is paying 5.01% APY. The CU pays that rate on balances up to $30,000 and requires members to take e-statements, access home banking once a month, perform 15 debit transactions per month, and have an automated reoccurring monthly deposit.
The account has taken off since it was launched 18 months ago, Conrad said, netting over $22 million in deposits, virtually all new money. "We have not decided on anything. But it is possible we may require members to do more debit transactions. Maybe we put in a stipulation that a certain percentage of those transactions must be signature, and lowering the rate is a possibility."
River Valley CU in Miamisburg, Ohio, pays 2.5% APY on its High Interest Checking. The account requires members to perform 12 debit transactions per month and take direct deposit to get the rate that is paid on the first $25,000.
John Bowen, CEO of the $190-million RVCU, said a drastic cut in interchange revenue may prompt the CU to require members to double the number of monthly debit transactions. "That would only be 24," Bowen pointed out. "For most people that is still routine."
The $462-million Kemba CU here promotes its 3.5% APY Get Green Checking that requires members to perform 12 monthly debit transactions, take direct deposit and e-statements, and use home banking once a month. CEO Steve Behler said his Cincinnati-based credit union realizes a 12-cent interchange cap would impact the program, but that the CU is not yet ready to make plans for potential product changes. "We do not know the final rule from the Fed, as this is just a proposal," he stated.