NEW YORK-Banks appear to be recouping some of their debit interchange losses by boosting minimum balance requirements to avoid monthly checking fees.
That is the opinion of one analyst who also believes the move opens the door for credit unions to attract more Gen Y members.
MyBankTracker.com surveyed the 10 largest banks and 10 largest credit unions and stacked them up in 10 fee categories (see chart). The biggest difference in fee pricing, noted Co-founder Alex Matjanec, is banks requiring entry-level checking account customers to keep a $1,626.26 minimum balance to avoid a maintenance fee. The 10 credit unions' average minimum balance to avoid a fee is $500.
"Young adults just starting out are saying, 'I have to pay rent, bills, and I can't save that much a month to keep my minimum balance up,'" said Matjanec. "This is sending Gen Y consumers away from the big banks to prepaid debit cards, community banks, and credit unions."
In 2010, according to a Bankrate checking study of the top five banks and top five thrift banks, the average checking minimum to avoid a fee was $249.50, Matjanec said.
Matjanec also noted that banks have raised their monthly maintenance fees, some to $10 from $3. "Plus, a number are now just making the fee unavoidable."
Another fee difference that Matjanec said stands out against credit union pricing is the out-of-network ATM withdrawal fee-banks charge an average of $2.20 and CUs 83 cents. "People made a big stink about the $5 Bank of America debit card fee. With this pricing bank customers are now probably spending $6 to $7 dollars a month in out-of-network fees."
Matjanec said the big banks are beginning to charge for incoming wire transfers, something most never charged for before. "It's hard to find a bank that does not charge a fee for everything now."
Credit unions surveyed were: Navy FCU, Vienna, Va.; State Employees' CU, Raleigh, N.C.; Pentagon FCU, Alexandria, Va.; BECU, Tukwila, Wash.; SchoolsFirst CU, Santa Ana, Calif.; The Golden 1 CU, Sacramento, Calif.; Alliant CU, Chicago; Security Service FCU, San Antonio; and Star One CU, Sunnyvale, Calif.
