Upfront About Fees

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MEMPHIS — Methodist Healthcare FCU President Kristi Vick has a special name for her CU's non-interest income strategy: "We just call it doing everyday business."

The $25-million, 6,500-member CU generated $1.3 million in non-interest income during 2010, much of it coming from overdraft fees. Members are charged $29 if a check is returned and $44 if the transaction is put through and the account is overdrafted.

"Most of our money is generated from people who basically don't handle their account well," acknowledged Vick. "You can do business with us, in all honesty, and it never costs you anything but the cost of your box of checks-and we give the first box free. We are a one-sponsor credit union, which helps us keep better control of our membership and better contact."

Even with the overdraft fees, Vick said that Methodist Healthcare still offers free checking, a service most members take advantage of. A small number of members have one of the credit union's "prime checking" accounts, which require a $1,000 balance at all times or a $10 fee is assessed.

Loan volume is also slowly on the rise, and in addition to that non-interest income, the CU also charges a $15 credit report fee on all loan applications.

Vick said that the MHFCU's board was initially hesitant to implement the overdraft fees "because they thought we were gouging our members by charging these fees."

But after explaining the paper trail of a returned transaction, Vick explained to the board that if the CU just paid the transaction the first time it would not only save members money in the long run, but also be an effective response to payday lenders. "Some people say 'I can't believe your members will pay that.' I tell them to go down the street to the Check Into Cash place and see what they charge."

While interchange regulations may lead to the credit union instituting a nominal fee for checking, Vick also said that members have generally accepted small fees if presented the right way. "We're offering a lot of things to them that are costing big bucks," she said, noting that, for example, a $5-per-month fee on a checking account is not exorbitant. "I think if it's presented in the right light, they could understand that. Will we lose any members? We might, right off the bat. But will they come back? I think so."

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