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Big banks' fees, small banks' opportunity?
Local banks and credit unions expect to see a slight increase in membership as large national banks such as Bank of America start charging customers fees for using their debit cards.
“We definitely see this as a positive for credit unions, because when the consumer does a comparison, I think they’ll see that there’s a great value in working with a credit union,” Leah Olson, vice president of marketing for Kitsap Credit Union, said. “We don’t have the number of fees that other financial institutions have.”
Bank of America plans to impose a $5 per month fee for debit card use, to counteract the effect of new federal regulations that limit how much banks can charge retailers for each debit card swipe to make a purchase. Other major banks such as Wells Fargo and Chase are also planning or experimenting with monthly debit card fees.
“Customers tell us that while $5 may not seem like a lot, it actually can be, when added to the other associated fees on many of these accounts — especially during these tough economic times,” Kitsap Bank vice president of marketing Shannon Childs said. “Kitsap Bank has welcomed a number of new customers due to the migration away from the big banks and their rising fees.”
Previously, banks charged merchants an average of 44 cents per debit-card transaction. A provision in the new federal law — which only applies to banks with more than $10 billion in assets — caps the charge at 24 cents.
Although the smaller, local banks won’t be impacted by the transaction fee change, and may get more customers fleeing new fees, senior officers at the banks weren’t entirely enthusiastic about the new legislation.
“We do believe there may be some trickle-down impact to us,” Olson said. “We don’t know what the impact will be.”
Steve Gorseth, president and CEO of Peninsula Credit Union, also had mixed feelings about the banking reform.
“I think it will hurt all financial institutions,” he said. “Whenever anything gets put into place like that — anything that limits a financial institution — that gets passed along to the consumer, and everywhere else.
“Whenever the government gets involved and puts in price limits and restrictions on what businesses can do, they’re going to make up expenses somewhere.”
Senior management at Kitsap Bank, Kitsap Credit Union and Peninsula Credit Union said confidently that they don’t plan to add fees, based on what the larger commercial banks are doing.
A lot of people have called Kitsap Credit Union to see if any new fees are looming on the horizon, Olson said. “We are not even considering that at this point.”
Several leaders of the local banks said they were curious to see the reaction to the reforms.
“From our standpoint, we’re watching with interest what the larger institutions are doing, and trying to figure out how we can help our membership as much as we can,” Gorseth said.