The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Free Checking Could Go The Way Of Free Baggage Check

On October 12th, 2010, posted in: Uncategorized by

Which are you most surprised by: the fact that the Boys of Summer didn’t make it to fall or that the perennial bottom-dwelling Rams have won two games and for a short window of time were tied for first place?  Well, the Cardinals broke my heart and if the Rams are anywhere near first place before we carve the turkey in November, I’ll put on my #13 Kurt Warner jersey and jump smack dab in the middle of the bandwagon.  Oh yeah, and the Blues won their home opener.  Yes, the winds of change are blowing through River City’s sports teams.

Credit unions are in for some change, as well.  This non-profit, cooperative credit union movement that I’ve called home for about two-thirds of my life is beginning to look different.  How serious is it?  Think caterpillar to butterfly kind of change.  Well, maybe not that dramatic.  Think Joan Rivers pre and then post facelift times four.  That too seems off the chart, but it’s closer.  Nevertheless, change is coming.

Credit unions are going to get handed a gift from our distant cousins in the banking industry.  Much like the airline industry handed Southwest their “Bags Fly Free” 15 minutes of fame (and boy-oh-boy did the folks at Southwest seize the opportunity), we too are going to get a gift-wrapped strategic kiss “right on the lips” as the banking industry begins to slowly kill free checking.

What we’ll do with our glorious gift is a great mystery at this early juncture.  But, I’m afraid that many of my brethren in credit unions around our great country are going to blow it.  Interestingly, if they end up doing their best Wylie Coyote imitation, St. Louis Community Credit Union will be even better off.  But, I’d rather see that “when the tide rolls in all the boats rise.”  In other words, I hope all credit unions prosper from the gift.

Banks are going to stop offering any service that even remotely resembles “free,” and increase their costs to the upper end of the pricing continuum to pay for the rash of regulation that’s made its way into the financial services industry.  That’s what banks do.  They’re about making profit.  Credit unions on the other hand are not-for-profit, which by definition means there should be no hurry to follow the banks up the pricing ladder.  Thus, “bags fly free.”  Remember when everybody had free baggage checks?  Remember when everybody had free checking.  The parallels are uncanny.

Just because credit unions can eliminate “free checking” doesn’t mean we should. Yes, the market will allow us to follow the banks to a place just below the new costs for checking accounts, but we must resist the new “price-point.” St. Louis Community Credit Union is not going to follow the banks.  Free checking has a home here; so does free home banking; and so does electronic bill pay.

Bags fly free at Southwest, and checking stays free for SLCCU members.  If other credit unions follow suit and keep checking free, then our industry goes past go and collects big.  If some charge for checking because they can, then it would appear that our values and principles are cheapened.  How ironic?  Don’t change is my advice to credit unions everywhere.

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