WASHINGTON (10/29/14)--A report highlighting credit union and bank practices in serving military servicemembers--including with regard to charging fees--outlines a number of positives about credit unions, said Credit Union National Association President/CEO Jim Nussle Tuesday.
The Pew Charitable Trusts yesterday afternoon made public the results of its study titled "Banking Practices at Financial Institutions Serving the Military," which looked separately at credit union and bank practices in three broad areas: disclosures, overdraft practices and dispute resolution.
"Of course there is always room for improvement. But our interpretation of the study is that consumers remain better off doing their financial business at member-owned credit unions rather than banking institutions," Nussle stated. (See related story: CUs sweep best CD rates nationwide: GOBankingRates.)
The Pew survey results are based on information found on the websites of 134 member credit unions of the Defense Credit Union Council (DCUC) and 31 banks that belong to the Association of Military Banks of America--financial institutions that primarily serve the country's military servicemembers.
Pew launched the study to ascertain how closely these financial institutions adhere to Pew's own best-practices recommendations.
For dispute resolution, Pew found that 65% of banks include mandatory arbitration clauses in their account agreement documents, "limiting their customers' legal recourse by requiring arbitration in the event of significant disputes."
"On the other hand, only 6% of credit union employ these clauses," Pew noted in its release.
Another difference highlighted in the Pew release involved overdraft fees: the median fee for banks was $35 and for credit unions it was a significantly lower $29.
Independent research shows that total annual overdraft fees paid by bank customers to be an annual average total of $132--but only $35 for credit union members.
The report further states that three in four credit unions--and more than half of banks--cited in the survey "reorder some transactions in a manner that can create more overdrafts."
"But what the report does not state," Nussle points out, "is that many credit unions work with their members, clearing transactions in the order that members ask them to do so, in order to meet those members' particular needs." For instance, a member might ask that their home mortgage payment take priority over debits transacted at a 5-and-10-cent store.
DCUC President/CEO Roland "Arty" Arteaga commented that when credit unions do collect fees they return the money to membership through generally better rates on both savings and on loans, through generally lower fees, and through special programs for membership.