After the uproar in 2011 about large banks ending free checking accounts and adding new fees, Bank Transfer Day and the Move Your Money movement became popular. Many credit unions advertised themselves as a better alternative to the megabanks. Articles were written here and in the media about how switching to credit unions can save you money. However, not all credit unions are created equal, and some credit unions may cost you more than the megabanks.
One example of a credit union that may be more costly than a megabank is Arizona Federal Credit Union. In January, the credit union started to charge membership dues which charge most all adult members $3 per month. A reader mentioned this fee in the discussion forum. I reviewed the credit union’s fee page, and sure enough, it was listed. I also called the credit union yesterday and confirmed that the membership dues apply to just about all adult members.
During the financial crisis, Arizona Federal Credit Union had some difficulties. According to the AZCentral.com, in 2009 it had a massive fourth-quarter loss and an undercapitalized position. However, it has made a lot of financial progress since then. According to the credit union’s 2011 annual report, it “posted a net operating gain of $45.0 million” for 2011, and according to the financial data at the NCUA, it posted a net income on December 2012 of $44.5 million. In summary, I don’t see a financial reason for membership dues.
I’m sure the credit union officials hope that members will see enough value in the credit union’s services and rates to make the membership dues worthwhile. The credit union’s Everything Account (which combines a savings and checking account and is required for membership) does have some nice perks. Also, the credit union does offer some competitive CD rates (i.e. 2% APY 5-year CD as of 4/2/2013).
Willing To Pay Membership Dues for Higher CD Rates?
For savers, this brings up an interesting question: Would you be willing to pay membership dues if this would give you access to higher CD rates? For some it may come down to math. Do the higher rates pay for the member dues? If you live in Phoenix, you do have other options for competitive CD rates. Mountain America Credit Union still offers a 2% APY 5-year CD as of 4/2/2013, and it has a Phoenix and a Mesa branch (membership and accounts can also be opened online). And there is no monthly membership fee at Mountain America Credit Union.