Low fees help credit unions reach 100 million users benchmark

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WASHINGTON — Credit unions reached a new milestone in June when membership topped 100 million, the Credit Union National Association announced Tuesday.

The smaller, and often more personal, banking institutions, drew national attention in 2011 following "Bank Transfer Day," when a Facebook campaign started by consumers called on people to ditch their banks because some had proposed adding fees for debit card use. Credit unions reported a surge in customers seeking perks such as lower fees and better rates on loans and savings accounts.

But the growth has kept on, with membership increasing by roughly 2 percent each year.

Bill Hampel, chief executive of the Credit Union National Association, says two main things are driving the new membership: broader eligibility requirements and greater awareness. For instance, many credit unions have made it easier for more people to join over the past several decades by expanding eligibility based on where customers live, instead of restricting membership to a particular employer.

"In the old days, people would have thought 'those credit unions sound like a good deal, but I don't think I can get into one,' " Hampel says.

So now that roughly a third of Americans are using a credit union, should you be one of them? Here's a rundown of things to consider:

Free checking: Roughly 80 percent of credit unions offer free checking accounts, compared to less than 50 percent of banks, according to Moebs Services, an economic research firm. Credit unions also charge smaller fees that are generally 5 to 20 percent lower than those charged by most banks, says Mike Moebs, economist and chief executive of Moebs Services. But credit unions are less likely to give customers a break on those fees, he says, waiving less than 10 percent of fees compared to banks, which waive about 26 percent of checking fees for customers.

Overdraft fees: Overspending may sting less at a credit union than it does at a big bank: The median overdraft fee was $28 as of January, compared to $30 for banks, according to Moebs Services. But overdraft fees are among those that credit unions are less likely to waive. Credit unions also increased the fees last year at a time when banks are making it harder for customers to get hit by overdraft fees.

ATM fees: Many credit union customers are able to avoid ATM fees because credit unions — despite having fewer locations — typically give customers access to broader networks of ATMs by sharing branches and other resources. The largest such network of cash machines, dubbed the CO-OP network, offers about 30,000 ATMs across the country, Hampel says.

Saving rates: Because credit unions have fewer expenses than most big banks — they don't have to pay dividends to shareholders and they're exempt from federal taxes — they can often afford to reward and attract members with high rates on saving accounts, Hampel says. The low rate environment has made it so that those rates aren't as attractive as they used to be, but they are still typically more generous than what is offered by banks. .

Mobile banking: Some of the largest credit unions offer mobile banking apps that let customers deposit checks remotely using their phones, but for the most part, credit unions typically are behind banks when it comes to such mobile banking tools. Still, credit unions are catching up, Moebs says.