Fed Rule May Bring End To Free Checking
DES MOINES, Iowa – The Fed’s proposed new interchange rules may bring a quick end to free checking, two analysts have told Credit Union Journal.
Jeff Russell, EVP of The Members Group, believes checking is the first area credit unions will look at to offset the potential revenue loss. “I don’t think consumers will accept a per-transaction fee on debit cards like we have on ATMs,” Russell suggested. Rewards programs also are likely to get scrutiny as well, noted Russell.
In Rancho Cucamonga, Calif., Caroline Lane, SVP business development and marketing for CO-OP Financial Services, said her early conversations with credit unions indicate repricing is a topic of discussion. “Everyone I have talked to has said they are absolutely looking at repricing. I have not gathered enough data to say whether credit unions are favoring a per-transaction or per-account fee. But they are looking at everything.”
Lane pointed out the big banks are backing off free checking and debit rewards. “They are starting their repricing. Credit unions will have to figure where they want to be in the competitive landscape.”
According to Lane, the best thing CUs can do now is support the trade associations in the fight to adjust the proposed rules. “We [CO-OP] have aligned ourselves with CUNA and the Electronic Payments Coalition. We will continue to fight with our voice and our funds because these rules, as they stand, could be devastating.”