New Bank Fees Push More Americans to Credit Unions Last Friday, after Bank of America's (BAC) announcement of new fees on debit cards, retired postal worker Victoria Lee took her adult daughters to her local USPS Credit Union. "[My daughters opened] free checking accounts with no charges for the use of debit cards," Lee said. Like many Americans who are carefully watching every dollar, the Florida resident said she was grateful to have an alternative to retail Wall Street banks.

Meanwhile, a record-breaking 3,200 new checking accounts were opened over the weekend at the Navy Federal Credit Union, the world's largest credit union with 3.7 million members and nearly $48 billion in assets. The weekend surge -- which crushed the previous high of 2,500 -- fits into a larger trend for the credit union, which serves the Department of Defense and active duty military. It has had annual growth between 6.3% and 6.7% since 2007, and is on track to record a 14% uptick in membership this year, said Tisa Head, the senior vice president of savings products. In addition to its fee-free debit cards and accounts, another driver for the year's projected double-digit membership increase has been the credit union's willingness to post pay early for active duty members who use the Active Duty Checking account.

"You can't help but draw some lines to current economic growth," said Nancy DeDona, vice president of membership.

Amidst the financial chaos on Wall Street in the last few years, and with the biggest names in retail consumer banking getting monthly, if not weekly, black eyes, credit unions have been steadily gaining ground. Since 2007, the credit union membership in the United States has increased from 86.8 million to more than 91 million, according to figures from National Credit Union Administration. Total assets have increased from $755 billion to more $942.5 billion at more than 7,290 credit union organizations.

Patricia Briotta, a spokeswoman for National Association of Federal Credit Unions, attributes the recent growth to people's rising desire to find alternatives to dealing with Wall Street.

"[The growth] mirrors the time when people were looking and giving [credit unions] greater value. This is a Main Street option," she said. The organization launched an online credit union search engine called CU Lookup in 2008, which allows consumers to search for local organizations.

Technology Reduces the Stigma of Smallness

The 55-year-old NAFT Federal Credit Union, an acronym for Neighbors and Families Together, in Pharr, Texas, is another of the thousands of credit unions dotting the American financial landscape. It has grown steadily to a membership of nearly 9,000 members and assets of $57 million. That's small by industry standards, but NAFT does what these nonprofit financial institutions do best: It caters the needs of its local community, providing a high level of personalized customer service. Five locations, two of which are at local high schools to promote financial literacy, serve the hard-working community.

"We are not trying to grow assets but we are trying to take in new members," said credit union president Suzy Brinkman-Doughty.To do that, her credit union is focusing on attracting younger clients. "We have to meet needs of younger people. They want to do online banking and have convenience and immediacy." As a result, the Texas credit union has a basic online banking platform; there is no mobile app or fancy advertising campaign. But the credit union gets the job done, without a fee.

Credit unions are nonprofit, member-owned institutions and were created at the national level under the 1934 Federal Credit Union Act. Originally, most credit unions were associated with labor or worship affiliations, but today, many are open to all. They don't do commercial lending, but generally offer no- or low-fee checking accounts, low-minimum balances to open account and lower interest rates for small loans and credit cards, capped by law at 18% for federal credit unions.

The historical drawbacks to credit unions include fewer locations, smaller ATM networks, and eligibility requirements. With their emphasis on saving, many credit unions also require a nominal deposit into a share account -- the credit union term for a savings account. But the stigmas surrounding credit unions' accessibility are fading as technology and more diverse financial services allow them to compete for the 24/7 customer who values mobility. The Navy Federal Credit Union has nearly 200 locations around the world, and its ATM network stretches all the way to the tiny African nation of Djibouti.

"In 1979, I closed my checking account at a bank and I have never regretted it," said NAFT's Brinkman-Doughty. "If you really don't want to pay a fee, you don't have to. [Retail banks'] goal is to make money for stockholders. That is not our goal."






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