Checking Charges Highest at Credit Unions, Moebs Finds

Credit unions are earning more monthly service charge revenue per member checking account than banks and thrifts are, according to a new study from financial institutions analytics company Moebs Services.

Members pay $12.90 per month on average in service charges on checking accounts at credit unions, compared to $8.95 a month at banks and $3.52 per month at thrifts. The overall average was $9.06, according to Moebs Services. The data included account maintenance fees, minimum balance fees, overdrafts, ATM charges and other regular service fees; it did not include debit card swipe fees.

“In the long run, those financial institutions who have good control of their expenses in checking could be the real winners,” Moebs Services economist and CEO Michael Moebs said. “And, the credit unions might be the last ones standing.”

However, the study data suggested that checking accounts still aren’t money-making endeavors for most financial institutions.

The average cost of a checking account was about $20 a month according to study; at large banks the cost was almost $30 to near $40 per month for checking. Moebs reported that 94% of the study’s nearly 10,000 depository institutions that offered checking accounts lost money on them.

“If you add swipe fees along with service charges, credit unions come the closest to making checking profitable, while the large banks lose a lot in checking accounts, and even the thrifts with their low expense structures still have checking portfolios more unprofitable than credit unions,” Moebs noted.

From the consumer perspective, thrifts offered the best buy in checking, but credit unions offered the best buy as a depository for investors,” the study said.

“You can’t buy a cooperative organization, such as a credit union,” Moebs added. “However, if you are a bank you might want to look very closely at how credit unions make their members happy with free checking and low prices, yet are able to gain the trust of their members to pay much more than their competition in charges.”

Another Moebs study, published a few weeks ago, found that checking account balances at credit unions spiked 3% during the 12 months ended June 30, 2018, but checking account balances at banks dropped 1.8% over the same period.

The Lake Forest, Ill.-based firm said the $2,837 average checking account balance at credit unions marked an all-time high and was largely due to offers of free checking accounts and lower fees compared to banks.