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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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Credit Union President Asks Members to Save Their Reward Checking


Another president of a financial institution that offers a reward checking account has written about the problems of the Durbin Amendment and how it could force them to lower their reward checking rate. The Durbin Amendment is part of last year's Financial Reform Act. It requires the Federal Reserve to set limits to debit card interchange fees.

In January, the president of Royal Banks of Missouri warned customers that the new regulation would likely result in lower debit card fee income which would impact reward checking.

The latest warning was published by the president of Lake Michigan Credit Union. This credit union is one of the few institutions that still offer 4.00% APY on its reward checking account (it's only for balances up to $15K). The credit union president included in the warning a call to action for members to contact their representatives. There is currently legislation in both the Senate and the House to delay the implementation of the Durbin Amendment. Here's an excerpt of the open letter from the credit union president:

Interchange income also plays a big part in Lake Michigan Credit Union's ability to offer you free checking and our high interest bearing Max Checking account. The Durbin Amendment would drastically lower our interchange revenue and result in Lake Michigan Credit Union no longer being able to offer you free checking or pay the great rate of 4% APY* on Max Checking.

The Durbin Amendment exempted financial institutions with assets under $10 billion from the debit interchange fee cap. Since there are only three credit unions with over $10 billion in assets, one might think that most credit unions wouldn't be worried. However, just like Lake Michigan, almost all credit unions are worried that they will not be protected.

Lake Michigan Credit Union president's letter pointed members to the website sponsored by the Michigan Credit Union League, SaveMyFreeChecking.com. This website is designed primarily for Michigan residents. For non-Michigan residents, it points to the Credit Union National Association's Grassroots Action Center which is designed to make it easy for people to contact their representatives.

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  |     |   Comment #1
It is a known fact that what ever the Government touches, it always will be unintentional consequence and this is one of them. Washington has never done anything that sooner or later will turn out to be a bust.
  |     |   Comment #2
This is so typical of Liberals.........everything they touch backfires. They think they know what is best for everyone......and then their policies end up making it much worse.
  |     |   Comment #3
And, the Conseratives, right wingers have done nothing wrong. Remember GW and crew?
  |     |   Comment #4
That is why Medicare and Social Security are going to bankrupt this country.
  |     |   Comment #5
Nice going, folks, to make this a political forum:D
  |     |   Comment #6
Just because it's bad for the bank, doesn't mean it's bad for the consumer.  Banks are losing money because of the lower fees, but as consumers we were paying that money indirectly.  My bank has previously encouraged me to use my debit card for more than minimum payments to promote reward checking, but that doesn't mean it's in my best interest or I'm going to do it. 
  |     |   Comment #8
The reason we have these regulation is to protect us.  Illness, suffering, and Death do not spare Republican or Democrats.  You all complain about Government more when Democrats are in.  If Government is so bad then why we even have Government.  Why we have elections.  You all know that the Government is run by, for, and of the Big  & Small Businesses.   You all forgot how the banks misbehave go watch, 60 minutes of April 3, 2011. We are all suckers.  Banks are there to make money from you, me, and my neighbor.  They are the one's who are taking big risk all the time with your and my money.  Look at the stock market, where it was in 2009 and where it is now, look at the commodities, they buy futures with your and my money.  All the Big Bank on Wall Street and the Federal  Reserve are creating big bubbles, the reason is that we the people do not protest.  We are trying to work hard, save, and willing to lend our money to these banks for a small int erest rate of 1 % or less, they make 10% in one hour or less by trading.  We have had so many bubbles.  Al the Drs. are corrupt, they are robbing the medicare, they make money by misleading their patients, return business, repeat tests and surgerties.  Same for Medicare, some people should not be in Medicare but they get in any way through bribing the system.  Some human beings are so greedy they will kill their own mother to collect insurance, they have no fear, not even God.  They go to Church for forgiveness.  

Guys wake up, they will continue to rob us the innocent victims of the System.  It is the poor people who borrow money at 20% not the rich.  It is one of the oldest profession.  Rich are getting richer at our expense.  If you have saved up some money, you are not rich.  Rich are those who get rich by robbing others.  Do not you think we should close those 256 Military Bases all over the world, why do not we cut the biggest and most expensive arm of our Government which is Defense.  Defense for what.  Why we have so many enemies, why do not buy those enemies like we buy our senators, and congressmen.  You know why, because it is cheaper to spread peace and harmony than spread the animosity, who will use our weapons, divide and rule, divide and rule, Democrats and Republicans, wake up, join together, shake hand and work together to solve our problems, you can do it America, just follow Christ's teaching, do not talk religion, practice religion.  Just practice the teachings of the Bible, it will be better world.  Bankers are complaining because Chase bank charges $5 if you use their ATM. It is simply extremely profitable.  Government can create many jobs only if they have a retirement age.  They do not, therefore, there is so much dead wood, if those over 65s retire we can have our young graduates take those positions.  I can't believe they have no retirement age in the Federal Government.  Many of my neighbor can barely walk and they continue to go to the office, they are unproductive, these are the consequenses of no regulations.
  |     |   Comment #9
Does any one know what are three most expensive items are in our Budget? Answer is :  Defense, Social Security, Medicare.  More than 65% of Total Budget.  Google it please.  We have 256 bases all over the World?  Why?  We are still in Japan, Germany, Korea, Philippines, we never leave.  World War ended long time ago, but we never left.  Our real jobs went to China and other Parts of the world.  We have made China Rich and our people Poor, we have Service Jobs and China has all the Engineering and Manufacturing Jobs.  Our wages are not growing, our debt is growing because we continue to import that stupid Oil, because we love to drive at any expense.  Most countires in the world ride their bikes and walk to our work, we do not care. We want it now and at any expense.  We promote borrowing at every level.  Why?  So that we can remain indebted and slaves to Big Banks for Generations.  Why we have so many Credit Cards and Credit Card offers to little babies, children, students and Dead people because there is money to be had.  People contribute to Social Security and Medicare, therefore, they haveright to that.  Yes, they should put a income limit to that.  The Defense is the most abused.  There is too much corruption in that wing of the Pentagon.  Defense Contractors?  Defense Contractors? 
  |     |   Comment #10
New to me information!

Got this in a newletter from a Michigan Credit Union,"... Although the (Durbin) amendment says that financial institutions under $10 billion in assets will be exempt from the interchange price controls, it will not protect the smaller financial institutions. What this amendment will do, is give the larger retailers the ability to only accept those cards that are issued by the larger institutions in order to keep their interchange fees lower. This would leave financial institutions, like our credit union, unable to compete with the larger ones.

There is nothing in the amendment that provides lower costs to the consumer. In fact, the playing field becomes very uneven between the big mega financial institutions and your local community credit unions and banks. The result ends up being increased costs for the smaller insititutions.

In the current economic environment, where credit unions and local banks have been able to meet the needs of their members and customers, it shifts an unfair advantage to the large banks that during tougher times, weren't meeting the needs of their consumers. ..."

Goes on to ask members to contact their US Senators and US House of Representatives.
  |     |   Comment #11
This is not the first time, and I'm sure it will not be the last, that our government, under record deficits has encouraged spending and borrowing and penalized savers by manipulating interest rates to record low rates, providing cheap money to banks and encouraging more consumer borrowing and investment in an artificailly high valued equity market.  This approach, that in previous implementations had been in force for a few months to up to 2 years, has now been going on for more than 2 years, and has put our financial health and stability of our country's economics in a very perilous position.  This approach has been funded upon the backs of historic savers, who have had to pay very dearly for our current Federal Reserve mandate.  Who bailed out the banks and is continuing to keep the banks, in many cases, in record profits.  It was all done with OUR money, the savers.  And how did the banks repay the favor.... by eliminating services that were previously free, by eliminating deposit interest rates to record low levels that aren't even worth reporting on this site because they are so low, and making it even harder for small businesses to get loans.  Banks, like other large businesses in other sectors have severely reduced spending and hiring to build up record capital, whilst keeping our unemployment rate high and continuing to reward CEOs with record bonuses. Until more stand up and let their government reps know that this is not acceptable, we will continue to have to put up with the current situation.  In the mean time, retirees are facing REAL inflation and a wipeout of their nest eggs.  I don't see this situation turning around any time soon, as the US is still in a hyper deficit mode.  It is just a matter of time before banks and CUs will eliminate the benefits of reward checking, using the excuse of higher interchange rates or record low Fed rate.  They will do whatever it takes to make their organizations more profitable at the expense of consumers and savers.  Most have already essentially eliminated these financial products, and the holdouts like Lake Michigan CU will soon follow suit. 

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