woman works on her laptop and smiles at camera. Represents a credit union member.

How To Help Members With Fee Avoidance

The advancement of consumer-friendly technology over the last decade has allowed customers to gain better, more transparent awareness of the behind-the-scenes actions of their bank or credit union. This allows members to better understand their institution’s fee structure and the kinds of charges their institutions are charging. How can your credit union help its members achieve better financial health with fee avoidance strategies? 

With the COVID-19 pandemic wreaking havoc across the world and fundamentally affecting individual, everyday lives, credit union members are taking increased interest in saving as much money as they can. This is being done by avoiding unnecessary costs while optimizing their financial holdings. In fact, the personal savings rate in the U.S. reached 23.2 percent as of May, the highest it’s been since 1981. In addition to increasing their savings, credit union members can save money by practicing fee avoidance. 

Credit union members’ interest in saving and financial health is inherent in their very membership. In the spirit of financial education and achieving optimum financial health for their member community, credit unions should by nature be encouraged to promote the act of saving however and whenever they can. 

We have to be careful, though, to frame the topic that all fees are inherently evil. The truth is fees are generators of innovation that allow credit unions to remain open, healthy, and capable of continuing to enhance the services that help members achieve their financial goals. Unfortunately, many financial institutions (we’re looking at you, banks) assault the very customers they claim to serve with so many fees, hidden or otherwise, that it seems helping the customer doesn’t even occur to them anymore. 

While regulatory agencies have focused legislation on minimizing them in recent years, certain financial institutions have countered by increasing account fees to recoup the non-interest revenue. Credit unions, for their part, have targeted their messaging on the idea of “free” to attract new members. 

Therefore, in this period of severe economic and financial uncertainty with COVID-19, how do credit unions continue to at once produce revenue through fees while actively promoting financial health and literacy in a fee-averse financial setting?

Areas Credit Union Members Can Practice Fee Avoidance

To encourage members’ ultimate goal of achieving financial health, credit unions could pair service pricing choices with the aim of creating activities that encourage cost-saving behaviors or create income through fees. By allowing credit union members to make the choice between paying fees or forming positive and long-lasting financial wellness habits, the credit union becomes a partner, a personal advocate, in helping the member understand the concept of “fee avoidance.” By advocating for the member, the potential is even greater for a more meaningful, trustworthy, and longer-lasting sense of loyalty and investment from your membership.

So what areas could credit union executives counsel their members in practicing healthy fee avoidance and saving as much as they can? 

  • Credit Union Bill Pay

In a recessive economy like this one, where credit union members are trying to save money and cut back on costs, bill pay can be considered as a primary time- and money-saving tool. Worrying about credit ratings and the negative influence of late payments can be avoided when the credit union can help them set up a payment schedule and avoid late fees. 

The proof is in the numbers; a study of 14,687 online credit union members showed that more than half tried to avoid a late payment and practiced fee avoidance within the last year, with many paying a fee to make their payment on time. Households with kids (65 percent), women (61 percent) and individuals under 40 were more likely to try to avoid making a late payment. Of those who used a certain method to make their late payment, about half said they had to pay a fee to make an expedited payment, typically $10-$15. The fees add up! Credit unions could offer considerable value for their members by encouraging them to make their payments faster, thus resulting in fee avoidance.

Struggling credit union members experiencing “temperamental” monthly balances? Consider setting up direct deposit in which your paychecks or various other monthly sources of income are automatically deposited into your accounts. 

  • Go Paperless

If credit union members are looking for every way to practice fee avoidance, have them go paperless with communications or account statements. If they need printed statements, they can print it themselves, because many financial institutions have begun charging for paper. 

Credit union members’ checking accounts are their home base; it’s always important to keep some “food” in their house just in case an emergency occurs. By maintaining a soft cushion of money in the member’s account, they can avoid those pesky monthly maintenance fees. Credit union fees apply when savings accounts contain a balance of $250 or less and no activity over a six-month period. The key for members is to open and maintain activity at the credit union to keep member accounts healthy.

  • Compare and Contrast

Shop around. Getting more than one loan estimate can help to grab a lower rate for, say, a loan origination fee. If a lender knows credit union members are shopping around and they actually care about getting your business (if they’re smart), making two or more lenders compete for your business can result in fee avoidance with a lower origination fee.

Another benefit to getting multiple loan estimates is the opportunity to dig deeper and compare line items in the loan estimates. If you notice that the numbers on the two estimates aren’t even comparable, that’s an instant alarm. For example, if the fees in one estimate are significantly higher than the other but the first estimate doesn’t have a loan origination fee included, it’s likely the loan origination fee is just tacked onto other fees. This is an important tactic to watch out for when practicing fee avoidance because you can still bargain the total cost of the loan, particularly if you have another estimate with which to compare. 

In these nerve-racking days of COVID-19, it’s critical that credit unions and their representatives maintain outreach and attention on behalf of their member community to ensure they are staying afloat and maintaining financial health, regardless of their situation. Our mobile financial wellness app affords your members the opportunity to follow a healthy plan and assists with fee avoidance strategies. It enables your members to achieve consistent financial stability and resilience through real-time, one-on-one financial coaching, personalized learning, and cognitive behavioral feedback. 

To learn more, go ahead and download our “Financial Wellness For Today” white paper to learn how your credit union can promote a higher level of engagement from your membership by offering a financial wellness solution that actually works to change behavior for the better. Credit unions helping their members practice fee-avoidance is just one of the many ways you can serve your community and promote financial health! 

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