Bank Backlash Is Easy Money For Credit Unions

Bank of America’s most recent attempt at a user fee set off a firestorm that is benefitting local credit unions.

Public backlash was swift and B of A quickly rescinded its ATM user charge, but many angry customers didn’t care.

Meanwhile, some local credit unions, including SchoolsFirst Federal Credit Union in Walnut and Prospectors Federal Credit Union in Diamond Bar have reported a huge surge in new accounts. In addition, credit union employees have said that current customers choosing to use the credit union as their sole means of banking by adding new accounts and services.

“Never bank with a giant monster megabank again. If you are eligible to join Schools First, I would recommend joining,” wrote J.M. from Montclair on the SchoolsFirst website. “I have never had an issue with this bank and I think it offers very competitive products and very competitive rates.

They treat customers well and don't hassle you to sign up for products you do not need. I used to bank with a huge bank but have been a member since 2006 and have not looked back since.”

Michael Roberts, who oversees New Business at the Diamond Bar branch of Prospectors, said they have seen a nearly 100 percent increase in checking accounts since the beginning of October – just after Bank of America made its announcement.

“Mostly, our customers are tired of fees,” Roberts said. “We (credit unions) charge fees like anyone else does, but we charge typically less than half of a national bank. And because we are smaller, we know our customers better. They can call us and we can help them through tough times.”

Fundamental differences in the way banks vs. credit unions operate create larger fees for major financial institutions. While banks usually charge higher fees because they answer to a board of directors that expect profits, credit unions are often member-run and take fewer risks in investing the money they hold, Roberts said.

Membership in a credit union is not exclusive, but it can be specific to a certain career type or company.

There are two basic types of credit union:

• Community credit unions

This is the type of credit union that anyone can join if they live, work, worship, attend school or volunteer in the same city as a credit union branch. Arrowhead Credit Union is one example.

• Employer-based credit unions

These are more dependent on the employers they serve, like the SchoolsFirst credit union, which caters to teachers and school employees. This is the more traditional model, which is known to be somewhat smaller and member-friendly.

Prospectors Credit Union is small, with just over 6,000 members and draws from several businesses in Diamond Bar, Walnut, City of Industry and others in the San Gabriel Valley. Their clients include businesses as diverse as: Waste Management, Walnut Valley Water District, local hospitals, city employees, Sysco Foods of Los Angeles, QTC Management, Verizon and Alta Dena Dairies.

“They know their membership well and build that family-like banking experience,” Roberts said. “They’re very helpful. It’s community banking. It’s wonderful. A good portion of our membership comes because mom or dad works for Verizon or Alta Dena, and their kids join too.”