Nobody likes to pay fees, especially not to the bank. After all, you are giving them your hard earned money. All they have to do is keep it safe! Right? Well, yes… but we also have to try to do more. For example, here at the credit union we are not too terribly concerned with turning huge profits. We prefer to use the money we earn to add valuable services for our membership. These services also take some money.
Traditionally we have tried to keep our fees to a minimum and attempt to make money the old fashioned way – through interest rate spread. This is the difference between what we pay you on your deposit and what we earn on a loan. If you want to know more about that, read a post I wrote last year called “The Fundamental Benefits of a Credit Union”. The truth is most financial institutions don’t operate this way any more.
Banking dates back to the Roman Empire and for the first time in its history, most banks do not make their money with the traditional interest rate spread model. They now make their profit through fees.
There are fees that have to be charged – I call these the “Naughty Fees”. Unfortunately, these fees are a necessary part of doing business. Naughty Fees include NSF fees, stop payment fees, deposit item return fees, etc.
Believe it or not, I have conversations with people almost daily explaining why we have to charge a fee for these types of things. What it comes down to is that if you do choose to be naughty (by abusing your account) we have to give you an incentive to stop. However, we also know that sometimes mistakes happen. If our member rarely has a problem with their account we will often work with them to help get their account back on track.
We don’t just charge Naughty Fees because we like being big brother or some other wild reason. If you think in very black and white terms, when you overdraw your account, you are taking money that is not yours. You wouldn’t take a few dollars out of the cash drawer at McDonalds would you? - No way!
Friends, if you are paying NSF fees, please change your ways.
Not only for the moral reasons I mentioned above but more so because it is literally making you poor. The credit union recently conducted an audit of the fees we have collected and we found that some folks are paying in excess of $2000 per year in Naughty Fees! That takes my breath away! That’s an extreme example, but think about it, if your salary was $40,000 last year now it is only $38,000 – for no reason other that bad financial management.
If you need to get back on the path to financial independence, sometimes it takes some help. If you are ready to change, we are ready to help. Please contact us and we will sit down with you to put together a plan.