BETHESDA, Md.-Arizona FCU received a lot of attention recently when it introduced a $3 monthly membership fee recently, but one person believes more credit unions will follow.
"CEOs typically say that credit unions need to be lower (on fees) than the banks, because that's part of our general philosophy. But you do see some bucking that trend, like Arizona FCU," said Ben Psillas, president of Cardtronics' Allpoint Network. "They're not charging, $5, $8 or $10, but they're charging $3. It's a movement that's consistent with what I hear from CEOs, which is that to maintain the credit union philosophy and growth, we need to be less expensive. We don't have to match them dollar for dollar, but we don't have to be at $0 either."
Psillas believes the market will not see widescale adoption of membership fees anytime soon-if ever-but is confident more CUs will turn toward some form of relationship pricing for those that don't bring value to the credit union.
"The trend in the marketplace is: 'Free checking is dead,'" he said. "Some credit unions would say 'Great, that's a way for us to differentiate ourselves by saying we don't have those fees.' Others would say 'We have those fees-but they're far less than others.'"
But much of the significant growth CUs have seen in the last two years has been driven by consumers turned off by big bank fees; wouldn't a monthly membership fee have the same effect?
Psillas believes that while members are loyal, in many cases the CU's card is not top-of-wallet. He said that CUs who attempt to institute some kind of membership fee will need to push harder to become the member's PFI.
"What comes from that is, obviously, you have more income coming from more business, but you also have more card usage-more point-of-sale income, more fee income from the debit card, etc.," he said. "It's all sort of tied into a holistic approach with the member. They're taking that approach of 'Can I get more business with the member itself?'"
