It was the fee that broke the camel's proverbial back--Bank of America's $5 debit card fee caused a mass exodus of customers, heading mainly to a local credit union.
Credit Unions Online spoke with several credit unions about what they've been experiencing since the Bank of America announcement and nearly every credit union reported a marked increase in accounts.
Stull says, "One branch indicated that more than 50% of its new accounts were driven by B of A fees."
And it's not just Bank of America. Consumers may finally have had enough of big bank fees. "Some members have also mentioned Wells Fargo, which has also announced a debit card fee," Stull says. "This is a new trend, which we have not experienced in the past. During the bank bailouts the Huffington Post Move Your Money Campaign produced a lot of talk but little action. The fee appears to be the straw that broke the proverbial camel's back. This time we are seeing some action. It is hard to predict if it will continue, but for now it appears some bank customers are voting with their feet and moving to credit unions."
John Haggarty, AVP/Marketing at Provident Credit Union ($1.6 billion, Redwood City, CA) feels the same way. "We have received a lot of feedback from our members regarding the new debit cards fees announced by Bank of America and other national financial institutions."
He says that his credit union has also seen a significant increase in new accounts openings since the announcement on Friday with a large percentage of that increase coming through the credit union's online channel.
Call Federal Credit Union's ($350 million, Richmond, VA) online channel is also seeing a lot of activity in response to member inquiries about fees. Amalia H. Melis Marketing & Business Development Manager says that her credit union is getting several inquiries through the website. "We have an online question and answer system where if the member doesn't find the answer online he or she can submit questions online. In the past few days we've seen an increase in questions about whether we charge a fee for our debit card...which we do not."
In addition to sparking general interest, the Bank of America fee has also created new opportunities for credit union products and services.
For example, Melis says that Call is promoting its free checking account. "We anticipated this might happen with Bank of America so marketing was ready with a switch campaign. We're doing a big push right now with online web banners, newspaper advertising and promotion on Facebook and Twitter. In fact, we've seen four posts on Facebook from people who said they switched."
While Call promotes free checking, Arizona State and Provident both take more of a wait and see strategic approach.
Stull says, "We are monitoring the new accounts very closely and using on-boarding to try and increase the number of services per member. We do not want big banks flooding us with their unprofitable accounts."
He adds, "Our strategy for leveraging the consumer reaction to the big bank fees is to clearly communicate our value proposition. We have great rates, low fees and we are proud supporters of local communities and the local economy. We are the sustainable alternative to banking."
Like Stull, Haggarty says that communicating credit union advantages, such as a fee free debit card, may provide new opportunities. "A free debit card had become an expectation for all new accounts," he says. "We can now use our free debit card as a competitive advantage and highlight that fact in advertising to new and existing members."
Most credit unions are opposed to ever adding a debit card fee. In fact Stull likens debit card usage to old-fashioned check writing. "We have no plans to add a fee to our debit card," he says. "Using a debit card is no different that writing a check. It provides convenient access to making payments from your account. Alternative payment methods are expected to grow and we anticipate competing with banks by offering these services, debit cards could be passed by other technology in the future, but today are a very popular choice for consumers."
Melis says that Call won't be adding a fee either and hopes that continued communication with members will help them make an informed decision. "We're working closely with staff members to let them know what's going on and to remind them to communicate the fact that we don't charge a debit card fee and have no plans to do so either."
Haggarty agrees and says, "Provident does not have any plans to add a fee to our debit cards."
Related Article: Credit Unions Just Say "No" To Debit Card FeesBy Gina Ragusa