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Senate Rejects Latest Bid On Interchange Reform

WASHINGTON-The Senate Appropriations Committee agreed to scrap a proposal that would ensure the lowest credit card interchange rate for government transactions, the latest assault on the lucrative source of revenue for credit unions and banks.

Instead, the Senate panel agreed to a credit union-backed proposal that would study the interchange structure on government transactions.

The original amendment, proposed by Sen. Richard Durbin, the Illinois Democrat who has been crusading for lower interchange fees, would have required that federal government entities pay the lowest rate, currently reserved for supermarket transactions.

The bid comes just weeks after Sen. Durbin succeeded in getting an amendment into the bank reform bill that will set up the Federal Reserve as chief regulator on debit card interchange.

 

Belvoir's Loan Program Pays Out $85K To Members

WOODBRIDGE, Va.-Belvoir FCU reported it has issued to date in 2010 some $85,000 to members as part of its "Instant Cash Back" campaign, which pays out 1% of the entire loan amount at the time the loan is disbursed.

Study Links Fluctuating

 

Balances To Changing Rates

SAN ANSELMO, Calif.-A new analysis from Market Rates Insight has found that balances of transaction accounts, including demand deposits, NOW accounts and Automated Transfer Service (ATS) accounts, fluctuate mostly as a result of fluctuation in the average rate for checking accounts.

In the past five years, balances of transaction accounts fluctuated by as much as $281 billion, from a low of $702 billion in March 2007, to a high of $983 billion in December of 2009, according to MRI. At the same time, the national average rate for transaction accounts, which includes regular and special rates, fluctuated by as much as 1.19% (119 BPs) from a high of 1.97% in June 2007 to a low of 0.78% in March 2010, the company said.

The analysis found that 69% of the variance in the balances of the transaction account can be attributed to the variance in the national average rate of the transaction accounts. Moreover, there is a very strong and significant negative relationship between the balances of transaction accounts and interest rates on these accounts, which causes them to move in opposite directions, the company added.

"This is an indication that, when rates are low, transaction accounts are used as a holding place for funds," said Dan Geller, EVP at Market Rates Insight. "Until such time that interest rates start to go up. At that point, expect some of the transaction balances to shift to higher-paying deposits such as MM or CDs."

For info: www.marketratesinsight.com.

 

Mississippi CU Pioneer Rudolph Dill Passes Away

JACKSON, Miss.-Rudolph "Rudy" Dill, former president of the Mississippi CU League, has died. Mr. Dill was 97. He began in CUs in 1961 and became league president in 1983, retiring in 1989. During his career he helped to organize 24 CUs.

 

Filene Studies Payment Mix & Market Share

MADISON, Wis.-The Filene Research Institute has released a new study that examines relationship between new payment mix and market share, finding it is more about market share than about which payment dominates or will dominate.

"Credit unions need to recognize that a complex mix of payments-from debit cards to credit cards, each attuned to the context and convenience of the purchase-is here to stay," the new report by Filene Research Institute said.

Debit cards have been used by more than half of U.S. households for barely a decade, and there is no evidence that a peak in debit use is imminent-although changes to interchange rules could affect those trends, Filene said. Among the findings:

* Intensive credit card users have higher incomes and higher debt levels than those with neither card and those with only debit cards. Intensive users also have higher household net worth and a higher net worth to income ratio.

* Intensive debit card users are generally younger. Debit-only users decrease by age, from 29% of 18- to 29-year-olds to just 7% of those over 70. Conversely, credit-only users increase by age, from 29% of 18- to 29-year-olds to 49% of those over 70.

For info: www.filene.org.

 

UK Awards Program To Highlight Credit Unions

LONDON-The United Kingdom's Unity Trust Bank has launched the country's first-ever National CU Awards for Excellence program, which will recognize its first round of honorees in February 2011.

The program will recognize top performers in marketing, community mobilization, CU education, fundraising and active partnerships. The top honor is to be named after U.S. credit union pioneer Edward A. Filene. Winners in each category will receive trophies and cash awards.

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