Nov 20 2009

What People Pay: Deposit Account Fees at Banks and Credit Unions


The financial services regulatory environment is in flux. Major proposals are being debated, marked up, and prepared for implementation even as we speak. Credit unions are rightly concerned about the development of a new regulatory agency and the consequences of regulations that would inhibit their ability to serve consumers.One approach credit unions are utilizing to mitigate this risk is illustrating to policymakers how they are different from other players in the financial services industry.

This research brief compares the fees on deposit products between credit union and bank customers. Researchers Victor Stango, a professor of economics at the University of California, Davis, and Jonathan Zinman, a professor of economics at Dartmouth College, report the following key findings:

  • Average annual costs on bank checking accounts are more than twice as high as those on credit union share draft accounts.
  • Some of the bank/credit union difference can be explained by a greater number of fee-incurring transactions on bank checking accounts.
  • The greatest component of annual costs of both bank and credit union accounts is the overdraft fee, which is roughly one-third lower at credit unions.
Report Number 200