Why banks charge higher fees for their products and services — and why you don’t need to pay them
When it comes to effective ways to grow your savings, experts often point to your recurring charges as a great place to start reducing your monthly expenses. For anyone who hasn’t tried this, it can be a highly rewarding experience to review your statements, find those monthly subscriptions that you no longer use, promptly cancel them, and begin to calculate your savings. But there’s one item that can be easily overlooked when taking inventory of areas where you can eliminate spending without making a personal sacrifice: the monthly maintenance fee many banks charge their customers just to keep their account open.
How much are bank fees eating into your earnings?
A checking account provides a safe place to hold liquid funds and having one makes it easy to pay what you owe, or buy what you want or need. But if you have a checking account at a bank, there’s a good chance you may be paying more than you need to for this service.
A 2021 review of data compiled by MyBankTracker revealed that the average monthly service fee charged by the ten largest U.S. banks was $9.60 for a basic, non-interest paying checking account. With some quick math, you’ll find that maintenance fees alone often add up to well over $100 per year, but the monthly fee is just one example of a charge that big banks impose on their checking account customers. For instance, they may charge you for anything from account inactivity and ATM fees to paper statements.
Although there are some fees common to checking accounts at both banks and credit unions, you’ll generally pay less for these at your credit union. In addition, you can expect a bank to charge you significantly more in fees on other financial products, such as credit cards, personal loans, mortgages, auto loans and more.
Can you get around the monthly service fee at a bank? While it may be possible to get a bank to waive your monthly maintenance fee, you generally won’t be able to do this unless you meet certain stipulations. Many major banks will require that you keep your balance above a certain amount and/or set up direct deposit, make a minimum number of debit card transactions each month, or open another account at the same institution. According to NerdWallet, minimum balance requirements tend to be around $1,500 for basic checking accounts at national banks that don’t earn interest or offer other perks, but they can be as much as $10,000 for premium accounts.
Why do you pay significantly less in fees at a credit union versus a bank?
A credit union is a not-for-profit financial institution with a mission to promote the financial well-being of its members. On the other hand, a commercial bank must not only satisfy its customers, but also make money for its investors. Banks are primarily in business to earn a profit, and are therefore not expressly focused on the needs of their account holders. For this reason, they tend to charge more fees, and at higher rates. In addition, interest rates on loans are often higher at banks, while the returns on their savings products are likely to be lower.
As a financial cooperative, a credit union is owned by its members. Unlike a traditional bank, a credit union does not create profits for the purpose of distribution to outside stakeholders. Instead, it leverages the organization’s combined funds to create earnings which are returned to members in the form of better rates, minimal fees, and new initiatives and product offerings. At The Police Credit Union, this surplus income is also re-invested in the credit union to provide the resources, technology and infrastructure that enable us to deliver an exceptional level of service.
What are other important advantages of using a credit union?
Under its cooperative structure, a credit union is empowered to put the needs of its members first. As Forbes explains in their May 2020 article “What’s the Difference Between a Credit Union and a Bank,” credit unions provide the best possible terms that they can afford to offer for their financial products, as well as personalized attention and a focus on the unique needs of their membership.
Today, full-service financial cooperatives offer a wide spectrum of financial products in addition to the more traditional offerings like savings and checking accounts, and home loans. Since our inception in 1953, The Police Credit Union has expanded and enhanced our portfolio of high-value financial solutions to reflect the changing needs of our members. We now provide checking and savings accounts, auto loans, credit cards, personal loans, retirement and education products, and a wide variety of mortgage options. In addition, our financial products include customized solutions tailored to the unique membership we serve, such as our Public Safety Assistance Loan and End of Watch Debt Forgiveness Benefit.
There was a time when big banks had the edge over credit unions when it came to convenience, especially as this pertained to online banking services and the accessibility of branches and ATMs. However, most credit unions still around today have successfully adapted to survive in the increasingly competitive financial climate of the past ten years. Moreover, as a financial cooperative that has served law enforcement for more than six and a half decades, The Police Credit Union has a deep understanding of the need to make convenience a top priority for those with busy lives and unpredictable schedules.
In addition to our six Bay Area branches, our members have access to nearly 30,000 surcharge-free ATMs and more than 5,800 branches nationwide through CO-OP Financial Services. Moreover, we continue to advance our digital platforms, which includes investing in a robust array of mobile and online banking services. Among our secure online and mobile services are features such as email and text alerts, online check deposit, bill pay, and more.
Interested in taking advantage of the many benefits that membership with The Police Credit Union has to offer? It’s easy to make the switch by opening a checking account with us. What’s more, once you join, you can be a member for as long as you want to be, even when you change jobs, retire or move within California.
With just $25, Eligible individuals can open a checking account with no monthly maintenance fee, and up to 10 ATM fee rebates per month when using an out-of-network ATM. In addition, you’ll get a free first box of checks, overdraft protection and the option to get paid one day early by setting up Direct Deposit**. You’ll find details on these features and more at our site at http://bit.ly/ThePoliceCUChecking.
Not sure whether you’re eligible to join? The Police Credit Union offers membership to law enforcement personnel throughout California, but also to their civilian co-workers, including volunteers, and the families of this field-of-membership. In addition, employees that fall within these related associations in the nine Bay area counties are eligible to join: Fire, EMT and court employees.
For the purpose of membership, family members include grandparents, parents, spouse or domestic partner, siblings, (step) children or (step) grandchildren, aunts, uncles, nieces, nephews and first cousins. Find full details on eligibility here.