SCOTTSDALE, Ariz.-At least one analyst is concerned credit unions are reversing their own bottom lines when it comes to fee reversals.
"We're seeing that a little bit, and more processes are put in place to ensure that reversals are not being used unnecessarily or inappropriately," said Mike Kohl, president & CEO at Kohl Advisory Group.
Kohl stressed the importance of managing fee reversals as one strategy for bolstering non-interest income, and other observers agreed.
"Credit unions almost always waive fees if the member says something, and it's usually because they're nuisance fees instead of usage fees," noted Brian Scott, VP at The Members Group, who added that USAA is among the companies that have seen great success in charging usage fees rather than penalty fees.
Good Time For Reexamination
"This culminates into how you create a bundle of services that your members are willing to pay some monthly fee for, the same way that they're willing to pay for an app on their phone," Scott added.
Kohl pointed out that now is a particularly good time for credit unions to reexamine early withdrawal fees on certificates, "because if interest rates go up, you're going to want stickiness in those CDs."
He noted that Kohl Advisory Group previously cautioned CUs to put a floor on HELCs even though rates were at 6%, yet many credit unions declined to do so as their own forecasts did not envision rates declining to the point they have.
Kohl also suggested that CUs occasionally examine their menu of fees and eliminate those that are under-used and don't generate much revenue.
"You may be better off not charging the fee and bragging about the fact that you don't charge a fee for X," he said, stressing again that that should only be done on low-volume fees that don't occur very often.
Offerings like warranty and gap coverage on auto loans may be old standbys, but Kohl advised credit unions to not lose sight of the fact those products consistently drive non-interest income with little difficulty, because they are so closely tied to a service the member is already applying for.
MORE@CUJOURNAL.COM
Subscribers can read related stories at www.cujournal.com by searching the following:
Analysis: Bigger The CU, Bigger The OD Fee
Why Northern Federal Credit Union Eliminated More Than Half Of Its Fees
