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Strategies for Fading Fee Income

Don’t wait for the Fed’s final interchange rule or legislative action to prepare for lost fee income.

May 01, 2011
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Avoid collateral damage

Damaged member relationships are a valid concern given that financial services will cost more if the Fed adopts its current proposal. Harris fears credit unions’ image could suffer as a result.

“I don’t believe the retailers will pass the cost savings on to consumers,” he says. “This will take money out of consumers’ pockets and out of the economy at a time when both can least afford it.”

If credit unions are forced to bring their product pricing and fees more in line with banks to recoup lost interchange income, Harris worries credit unions might be viewed in the same light as banks.

Interchange fee income“The major banks are using this as an opportunity to significantly raise their fee structures—they’re being blatant about it,” he says. “The Dodd-Frank legislation reflects big banks’ poor image because of the bailouts. I would hate to be painted with the same brush as the big banks and Wall Street firms.”

That’s why credit unions should let members know what’s happening and why they might have to raise rates and add fees. “Tell members the credit union isn’t out to make more money, it’s that regulatory changes are forcing our hand,” Harris explains. “That’s an important message.”

Credit unions should carry this message to Washington, D.C., Wilson adds. “We must continue to put our face in front of the decision-makers in Washington. Talk about how regulations like the Durbin Amendment affect those who live in their districts.

“We’re in the business of working with legislators’ constituents to improve their financial lives,” he continues. “Adding costs for members to do business with us will adversely affect them. We will do everything in our power to offset that. Every dollar counts for them and for us.”

Next: Nine steps to recoup lost interchange income

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