This post is written by Starla Shelton of Palmetto First Federal Credit Union:
Everyone seems to be upset about the newly announced Bank of America fees. The negative comments and questions have starting pouring in from our members…Why is Bank of America doing this? Will the credit union start charging? From the comments I’ve heard, I know you’re concerned. I hope to answer some of your questions.
Will Palmetto First FCU start charging a fee? The short answer is no. Credit Unions typically have lower fees than banks. We are a cooperative, owned by our members, led by a volunteer Board made up of members.
At a bank, their board members are paid and represent shareholders. The more money the bank earns, the more money the shareholders earn. Because our board members are made up of members and they are not paid, they have no interest in raising our member’s fees.
Many credit unions in South Carolina are planning to sign a pledge to abstain from charging a fee for members to use our debit cards for as long as market conditions allow us to do so. Palmetto First has signed the pledge.
Why is Bank of America doing this? I could go on and on about this, but I’ll try to simplify: Recent legislation, The Durbin Amendment, will lead to decreased fee income from merchants that helped offset debit card losses, the expense of the debit card program, etc. For example: you go to the gas station and swipe your card for a drink and some chips. The merchant pays the card issuer/financial institution a fee from that purchase. With every debit card swipe, a small fee is paid to the card issuer. That money is put aside to pay for any losses due to theft, unauthorized use, and if any is left over, it is income for them. This decrease in fee income is likely to affect most banks and credit unions negatively. This is the reason for the new Bank of America fee.
What can you do if you are being charged? Shop around. All banks and credit unions should have a copy of a fee schedule that they can give you if requested. You can compare monthly service charges and any fees associated with debit card use. All financial institutions will have some fees. But you can compare and choose what’s best for you. For example: some financial institutions charge if you write more than a certain number of checks. If you’re not a check writer, then it wouldn’t affect you. You have plenty of choices out there, so if you haven’t already, consider a credit union.
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(Palmetto First is a paying advertiser on the Flossip.)