CHICAGO (1/29/16)--It’s pretty simple. Credit unions largely offer free checking, while banks largely don’t.
That according to a recent article in the Chicago Tribune, which found that even in the face of rising costs due to regulatory burden, credit unions still make checking accounts available to their members for free.
Only 46% of banks offer free checking to customers, according to the Tribune, citing research from Moebs Services, while credit unions offer free checking at a rate of nearly 75%.
“Credit unions believe their members want free, stand-alone checking,” so they offer it to strengthen relationships with members, said G. Michael Moebs, chief executive at Moebs Services (Chicago Tribune).
What’s more, three-quarters of credit unions continue to offer checking accounts at no charge even when operating environments have made it more difficult to do so.
For one, new regulations imposed in the aftermath of the financial crisis have ramped up compliance costs for financial institutions.
Before the implementation of new regulations resulting from the Dodd-Frank Act, a financial institution with roughly $1 billion in assets may have employed one person for compliance, but now that number for the same-sized institution has ballooned to four or five employees.
Additionally, the growing popularity of spending money in a checking account with a debit card also has raised costs.
In the past, checking accounts were used only to pay bills or make large purchases. But the average consumer now makes 50 to 60 transactions per month, compared with the 20 to 25 seen in the early 1990s. That trend has made it more costly for financial institutions to operate checking accounts.
Though it hasn’t stopped credit unions, and Moebs told the Tribune that, in the end, those still interested in free checking will more likely find it at credit unions.