Monday, October 15, 2018

NY Times: Employees of Modest Means Struggle with CU Fees

The New York Times is reporting how low wage Marriott employees are struggling with credit union fees.

The story noted how one employee making about $30,000 per year spent almost $2,000 on credit union fees. This employee was nickel-and-dimed by minimum-balance fees, excess-transaction fees, automatic money-transfer fees, and occasional overdraft fees charged by Marriott Employees' Federal Credit Union (Bethesda, MD).

The New York Times pointed out that in recent decades credit unions have turned to fee income to replace interest income due to falling interest rates on loans.

"Over the past quarter-century, the average value of the fees collected for every dollar of interest income has risen to nearly 17 cents, from just under 7 cents."

Marriot Employees' FCU is an outlier as it earned 52 cents in fee income for every dollar of interest income. But Marriott Employees' FCU is not alone as the article names several other credit unions with high fee income to interest income ratios.

The article further argues that fee income of $94 per member at the credit union is higher than at similarly sized credit unions.

The article also stated that Marriott Employees' Federal Credit Union is a good deal for affluent Marriott employees, as these fees subsidize favorable loan rates for financially well-off members.

Read the article.

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