Late last year Business Insider picked the brains of the financial whizzes at NerdWallet to prognosticate what the banking landscape will look like in 2012. Basically put, the Occupy movement was not a flash in the pan.

According to NerdWallet, the 1% who possess unblemished credit appear to be the only group big banks want to work with--folks in the 99% should start looking elsewhere.

Anisha Sekar VP/Marketing at NerdWallet says that banks are only interested in those with pristine credit. "With everything so volatile (in the markets) right now, people are very unwilling to take on credit risks."

This means higher fees for those who don’t park a boatload of cash at the big bank and better rates for those who do.

Try a Credit Union if Your Credit isn’t Perfect.

NerdWallet suggests that if your credit isn’t ideal, a credit union is your best bet. However, Alison Jones, SVP/Marketing Director at Patelco Credit Union ($3.6 billion, Pleasanton, CA) doesn’t totally agree with this assertion.

“Credit unions are in business to serve the needs of the 99%,” she says. “While the article implies that the 99% have poor credit, and only the 1% have good credit, that is untrue.”

She says that there are plenty of people in “the 99%” with good credit who need the loan and deposit services offered by credit unions. “While we certainly do offer services that might appeal to the 1%, including insurance and investment services, our focus is on helping the people living and working in the communities we serve.”

Check Out Credit Card Bonus or Rewards Programs

Sekar says that last year she saw credit card signing bonuses worth 1,000 airline miles and thinks this trend will continue. However, while the big banks may be giving teaser rewards for signing, credit unions are offering ongoing rewards for both credit and debit card usage.

Numerous programs such as Pentagon Federal Credit Union’s ($15 billion, Alexandria, VA) PenFed Premium Travel Rewards American Express Card or PenFed Platinum Rewards Card are readily available in the market.

In addition to ongoing incentives for credit cards, credit unions are also rewarding members for debit card usage. Tropical Financial Credit Union ($724 million, Pembroke Pines, FL) offers a program that gives the member points for usage, which can be redeemed for merchandise, travel, experiences and event tickets.

Credit Union “In Person” Member Service Thrives in 2012

NerdWallet predicts that as checking accounts become less profitable banks will begin closing brick and mortar locations in order to save dough. "Now that checking accounts have become so much less profitable...banks know they'll have to bring down costs in order to be anything close to profitable," Sekar says.

As bank customers try to navigate phone trees and online customer service black holes, credit union members will still have a friendly member service representative to assist them with financial needs.

Jones says that Patelco plans to combine technology with branch support to provide the ultimate service experience.

“We will continue to use our brick and mortar branches to meet the needs of our members, while also providing the sophisticated technology necessary to conduct mobile deposits, online banking, BillPay, mobile and text message banking for those who prefer the convenience of 24/7 banking from anywhere.”

“We are, in fact, opening a new branch in San Bruno this year, and relocating one of our existing branches to a larger, nicer location in San Mateo, California while also launching mobile deposit functionality, a new Android App and an i-Pad App later this year,” she adds. “We will continue to give our members improvements in whichever channels make the most sense for their needs.”

Sneaky Bank Fees Reveal More Transparencies at Credit Unions

Sekar says that banks will essentially remove “unprofitable” customers by sticking them with more hidden fees this year. Although Bank of America recanted its $5 debit card fee, the bank and other multi nationals are finding other ways to recoup costs by sprinkling in hidden fees--many fees may go undetected by the customer for months on end.

Jones says that credit unions are a different breed when it comes to fee delivery. “Credit unions, and Patelco in particular, prides itself on transparency, and so, while banking fees are an inevitable part of business today, we strive to keep our fees lower than banks, and to communicate clearly about the fees we do charge,” she says.

As credit unions strive to communicate with members about fees, former big bank customers are finding themselves in a “mafia” type situation where they try to get out…but are pulled back in again.

Last week The Huffington Post reported that former JP Morgan Chase and Bank of America customers complained because after closing their checking accounts they discovered the accounts were suddenly reopened. The reason--bank policy.

Betty Reiss, a Bank of America spokeswoman, told The Huffington Post that if the bank receives something like an electronic deposit or credit post to the closed account it will be automatically reopened. "If we receive something, we may reopen the account to accept the item, and the account may be subject to associated fees," Betty Reiss, a Bank of America spokeswoman, told The Huffington Post. "We remind [customers of that] when they are closing the account."

The Boston Globe reported that upon account re-opening, some banks will charge up to $50. The Huffington Post talked to one former Bank of America customer who said, “I closed my account and went to a local credit union. After I had closed my account, I had some difficulty because a paycheck was direct deposited to my old, closed account. When I called Bank of America about this, they told me the funds had not been deposited and that they could not hold them for me when they were received. Instead the funds would be sent back to my employer. Working with my HR department, I found out that the funds had actually been deposited and that the customer service representative had simply not taken the time to look it up and lied to me about it.”

….talk about “hidden fees.”

Relationship Banking Provides Greater Rewards

Unlike some trends where credit unions and banks differ greatly, the relationship banking trend has permeated both banks and credit unions---to the consumer’s advantage.

Jones says that members will enjoy better pricing on loans and deposits as a result of making the credit union the member’s primary financial institution.

“One trend I could see becoming more prevalent in the credit union industry is that of relationship banking,” she explains. “Because members are owners, their investment in the use of credit union products and services benefits the entire membership. When members utilize loans from credit unions rather than banks the revenue generated returns to the member/owners rather than the shareholders of the big banks. As such, we may see better pricing on loans and deposits for those who make the credit union their primary financial institution and move more of their overall banking business to their credit union.”

Credit Unions Continue to Offer the Best Auto Loans

Sekar says that CUNA talked about wanting to grow auto loans and credit services. "I wonder if they might want to look at less-than-perfect credit market that major banks are ignoring. Where they can compete is on interest rates rather than rewards." 

One area credit unions do exceptionally well with is working with local dealers to harvest auto loans. “We have extremely competitive auto loan rates, continue to work with dealers in our market areas to offer both car sales opportunities and solid financing opportunities and we are seeing the volume pick up in the first part of the year,” Jones explains. “It’s about keeping our name in the market, making sure our members know they can get pre-approved for car purchases, and offering value-adds like our MAP, auto buying service, that will do the car shopping for the member for free, going as far as to deliver the car to the member’s door. Informing the membership and the public about all the benefits of credit union membership is an ongoing process.”

Consumers Still Turn to Predatory Lenders

Unfortunately although credit unions offer a viable alternative to big banks, some consumers will still fall into the predatory lender trap. “My worry is that ... people on the lower end of the income spectrum are going to be driven out of the banking system and move toward prepaid credit cards, payday loans and short-term avenues that are really detrimental to their health in the long-term," Sekar says.

Jones shares Sekar’s concern. “This is a challenge, as we cannot reach out to everyone, and do not have the resources to communicate credit union benefits to all who may need them.”

Jones says that credit unions still suffer from misunderstanding in the marketplace. If people are even aware of what credit unions do offer, many still believe that they must be part of a select employer group to join.

“They do not understand that many of the limitations to membership have been removed, and credit union membership is open to those who ‘live, work, or worship’ in a given geographic are, thus opening membership to almost anyone. And with credit unions having such limited advertising and marketing budgets, and needing to spend very wisely, we cannot afford the general awareness advertising that is most needed to reach the largest group of consumers.”

Ready to move away from big bank nonsense and take a logical 2012 approach to financial freedom? Find a credit union in your area today.

Resources:
http://www.businessinsider.com/12-banking-trends-to-expect-in-2012-2011-12#the-year-of-the-1-1#ixzz1mk0TqoHU
https://www.penfed.org/
http://www.huffingtonpost.com/2012/01/31/zombie-checking-accounts-_n_1245065.html?ref=business