Nov 20 2009

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

Report  
Number  
200

This research brief compares the fees on deposit products between credit union and bank customers.

Victor Stango, PhD
Associate Professor of Economics
University of California-Davis
Jonathan Zinman, PhD
Associate Professor of Economics
Dartmouth College
Report Number 200

Executive Summary

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.

What is the research about?

In this research brief, we focus on a question of particular importance to the credit union industry: How do deposit account fees paid by credit union customers compare to those paid by bank customers? While there is general agreement that credit unions charge lower loan rates and pay higher interest on savings, we don’t know much about the fees charged on transaction accounts. This question has become more important in recent years as fees on accounts have become more important to financial institutions as a revenue source. 

What are the credit union implications?

These findings in this report illustrate the different approaches credit unions take toward consumer pricing versus the for-profit financial services model. As the public policy debate around consumer financial services evolves, these findings and other data will likely be helpful in informing legislators about the unique role U.S. credit unions play in the responsible and consumer-friendly delivery of financial services.