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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Savers Should Watch Out for Fees at Both Banks and Credit Unions


As I mentioned on Monday, you can often find the best CD rates at credit unions. However, credit unions aren’t perfect. There are some credit unions that have fee policies that are even worse than the big banks. This Washington Post article highlights a recent study that shows credit unions are raising overdraft fees faster than banks. It should be noted that the overdraft fees are still lower on average at credit unions than at banks. Overdraft fees are rarely an issue for savers who are careful not to spend more than they have in their accounts. However, there are other fees that can be an issue for savers. And there are some credit unions that you do have to worry about these fees. I thought it would be helpful to point out a few of these credit unions.

One credit union charges a monthly fee just for being a member. It’s Arizona Federal Credit Union in Phoenix, and in January, it started to charge membership dues which charge most all adult members $3 per month. I did a review of this membership fee in April.

Another credit union with a type of membership fee is Dade County Federal Credit Union in Miami. Instead of calling the fee a membership fee, the credit union calls it a security fee. I noticed it when I was reviewing the credit union’s reward checking account. This reward checking account used to be a good deal, but the balance cap has fallen to $5,000. I also noticed this in the small print “Security Fee of $1.99 will be applied to account on a monthly basis.” This security fee is also mentioned for the other checking accounts. I did some searching for a history of this fee, and I found this 2011 FW thread in which one commenter mentioned “I was flat out told that the fee is required for all new accounts and that I would not be able to opt out.”

Fortunately, monthly membership fees are rare. One thing that’s more common is a monthly fee on checking accounts Fairwinds Credit Union in Central Florida ended its free checking account a couple of years ago. It now has potential monthly fees on its checking, savings and money market accounts unless members meet certain requirements. Most requirements are not that bad. For example, the $7.50 monthly fee on the Fair Checking can be avoided with a $500 average monthly balance. However, for savers these fees can hit you if you're not careful.

One Nevada Credit Union in Las Vegas also has monthly maintenance fees on its checking accounts. For the credit union’s One Checking Rewards, a $5 monthly fee is only waived for the first 90 days of account opening. For the One Checking, members need at least 15 debit card purchases or a $2,000 balance to avoid a $5 monthly fee.

Savers can typically avoid monthly maintenance fees without much problem by maintaining minimum balances. One type of fee that’s more likely to hit savers is an inactivity fee. I’ve been hit by inactivity fees by two credit unions. In addition to fees, account inactivity can also cause your accounts to be frozen which can be costly as I described last year.

The Washington Post article listed some reasons why some credit unions have been increasing fees. These include the low-interest-rate environment, high losses on loans during the recession and NCUA charges to cover losses on mortgage-backed securities by the corporate credit unions. It should be noted that many credit unions have avoided new and higher fees. It should also be noted that credit union members can vote for their board of directors who oversee management. That may help to pressure credit unions to maintain fee-friendly policies, but sometimes the easiest way to voice displeasure is to just close your accounts and move your money to another institution with more friendly fee policies.


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Comments
14 comments.
Comment #1 by Anonymous posted on
Anonymous
I got hit with a $3 fee at Key Bank for calling cusotmer service too often when their on line banking was down due to hacking.  One of, no, the worst financial institutions I have ever dealth with.

13
Comment #2 by Anonymous posted on
Anonymous
THE US SENATE FEDERAL CREDIT UNION

ASSESSES A $5 "FEE" EVERY 3 MONTHS IN WHICH THERE IS NO ACTIVITY

(NO CHECKING ACTIVITY OR NO SAVINGS ACTIVITY)

EVEN IF YOU HAVE A CD WITH $250,000 (FOR EXAMPLE)

AND SEVERAL OTHER CREDIT UNIONS ASSESS A FEE FOR INACTIVITY (YEARLY USUALLY)

 AND DORMANCY (3 YEARS).

SUGGEST: DO A 1 CENT ACTIVITY ON ALL YOUR CREDIT UNION ACCOUNTS--BOTH SHARES ACCOUNT AND YOUR CREDIT UNION CHECKING--YOU WONT GET A FEE AND YOU WONT BE INACTIVE AND WONT BECOME DORMANT

10
Comment #3 by Anonymous posted on
Anonymous
I recently was nofified by Pentagon Credit Union that they would begin charging me $1.00 for them to mail my monthly bill for my credit card.  To avoid the $1.00 fee, you can sign up to retrieve your monthly bill online.   

8
Comment #4 by Anonymous posted on
Anonymous
us senate fcu charges a fee only after 12 months of inactivity , not 3 months

10
Comment #5 by Anonymous posted on
Anonymous
Pentagon Federal Credit Union has sent out notices in credit card billing statements of new fees effective August 1, 2013.

1st fee: $1.00 fee per PenFed Credit Card Account for each paper copy of credit card statement.

2nd fee: $1.00 fee for each paper copy of Consolidated Statement of Accounts.

The fees can be avoided by signing up for electronic statements.

Since the fee is charged per paper copy of credit card / consilidated account (savings, checking) statement, if you have more than one credit card with PenFed (since each credit card / consolidated account statement is sent separately), the fees can quickly add up.

7
Comment #6 by Anonymous posted on
Anonymous
I have had a CU charge an inactivity fee for a savings account, when my checking acount there was quite active--and at a time when I had CD's with them.  They did reverse the fee when I complained, but the process took 15 minutes out of my life.

5
Comment #7 by my2cents (anonymous) posted on
my2cents
This just in:

April 23, 2014 (Washington DC): The nation's largest banks today announced that they will collectively start assesing a new "Recovery Fee" on all normal fees a bank assesses. For instance, if a customer incurs a $20 overdraft fee, there will now be a new $5 "Recovery Fee" on that $20 overdraft fee -- then another $5 "Recovery Fee" on the original "Recovery Fee", and yet another $5 "Recovery Fee" on the "Recovery Fee" of the original "Recovery Fee" of the Overdraft fee. This will continue until a customer's balance is depleted to zero, at which point both a "Below Required Balance" fee, as well as an "Inactivity Fee" will kick in -- followed of course, by "Recovery Fees" for both the "Below Required Balance" fee and "Inactivity Fee". After six months, the bank will come to repossess any assests the depositor might still have (stocks, real estate, butterscotch candies). The US House of Representatives codified this new statute into law last month with the passage of the "Protect Happy Smiling Bankers Act of 2014."

On a related note, JP Morgan/Chase has just completed its purchase of Norway.

8
Comment #8 by Anonymous posted on
Anonymous
That stinks that Penfed is charging for a BILL.  I have estatements for my CD's with them but get a paper card bill.  I haven't gotton any notice but if they plan on doing this I will no longer use my Penfed card.  I won't cancel it so it does not affect my credit score.  I use it for gas only and get 5% back.  I'll just use my BOA card that gices me 3% off gas (2% on food and 1% on other things).

7
Comment #9 by Anonymous posted on
Anonymous
Whenever you are charged a fee for mailing you a credit card bill to pay, then that is a pretty good step to losing current and future customers. 

8
Comment #10 by Rosedala posted on
Rosedala
#ANONYMOUS #2

<< SUGGEST: DO A 1 CENT ACTIVITY ON ALL YOUR CREDIT UNION ACCOUNTS--BOTH SHARES ACCOUNT AND YOUR CREDIT UNION CHECKING--YOU WONT GET A FEE AND YOU WONT BE INACTIVE AND WONT BECOME DORMANT>>

Interesting!  How do you do that...wihtout getting kicked out of the bank altogether?  :o)   Thanks.

 

2
Comment #11 by Anonymous posted on
Anonymous
If you don't get kicked out for creating one cent account activities, YOU SHOULD!

1
Comment #12 by Anonymous posted on
Anonymous
The Pentagon Federal paper statement fee announcement is embedded in their newsletter that was sent on July 9 (title of "Your Pentagon Federal Credit Union Statement is Ready") to your inbox.  It is not mentioned on the last two credit card mailed statements anywhere.  So, if you don't read the online newsletter, you will be unaware of the fee changes on August 1.

3
Comment #13 by RJM posted on
RJM
Do penfed fees apply to the IRs forms also ?

 

That is, do I need to go paperless for everything to avoid fees ?

2
Comment #14 by Anonymous posted on
Anonymous
Penfed has a consolidated statement fee that is $0.50 if you opt to receive a statement by mail.  That will be going up to $1.00 in August.  The fee is waived for a monthly direct deposit of $500 to a checking account or a balance of $500 in the checking account. 

There is no way around the $1.00 credit card statement fee. 

I know some store credit cards charge a statement fee for a mailed statement.  This is the first time I've known of a financial institution to charge to mail a billing statement.

2