When ‘Free’ Means Free

Regs spell out when you can—and can’t—advertise accounts as free.

September 26, 2011
KEYWORDS free , maintenance , rules
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Since the Federal Reserve issued its final rules on interchange fees, some financial institutions have decided to eliminate free checking as a strategy to recoup lost interchange income.

This is a strategy that could result in increased market share for those credit unions that continue to tout their free checking accounts to members. But it’s important to look at whether the checking accounts your credit union offers as “free” actually are free and whether the accounts or related services can be advertised as such.

Truth in Savings and NCUA Rules and Regulations Section 707.8 provide that advertisements must not be misleading or inaccurate and can’t refer to or describe an account as “free” or “no cost” if a credit union imposes any maintenance or activity fee on the account.

Appendix C of the regulation provides greater insight as to when credit unions can and can’t use “free” to describe an account or related services.

The rule also provides that a credit union can’t advertise that it waives fees if it imposes any maintenance or activity fee.

Maintenance and activity fees

Maintenance and activity fees might include:

  • Fees imposed for not meeting a minimum balance requirement;
  • Transaction and service fees that credit unions might reasonably expect to impose on a regular basis, including monthly service fees; and
  • Fees imposed to withdraw or transfer funds, or per transaction charges.

Fees for using ATMs or electronic transfer services that aren’t required to open an account aren’t maintenance and activity fees, however.

There are other specific instances where NCUA allows an account to be advertised as free. But credit unions should be careful because despite these provisions, credit unions still must ensure that the advertisement isn’t misleading.

Specific account services

NCUA rules allow a credit union to advertise a specific account service or feature as free so long as the credit union doesn’t impose a fee for that service or feature. For example, you might have free bill pay or free mobile banking services. So long as you don’t mislead members by implying that the account is free and that no other fee may be charged, then it’s acceptable to advertise the free bill pay or free mobile banking without actually linking them to a free checking account.

Keep in mind for mobile banking, however, that you may have other disclosures that should be included in the advertisement. These include the fact that although the credit union doesn’t charge fees for the service, the mobile carrier might charge fees for Internet access, text messaging, or e-mail services.

Limited time or conditions

NCUA rules also allow a credit union to advertise an account or specific account services as free even if they’re only free for a limited period of time. But in advertising the account or services as free, you also must state in the advertisement the time period that they’re free.

Another permissible use of free is when credit unions advertise accounts as free for members that meet certain conditions not related to share accounts, such as a member’s age.

For example, credit unions might advertise a share account as “free for persons over age 65,” even though it charges a maintenance or activity fee on accounts for members younger than 65.

So, when advertising an account or an account service as free, credit unions should always ensure that they’ve included the appropriate disclosures.

Additionally, be sure you’re not using “free” in ways that could be misleading or inaccurate.

ANDREA STRITZKE is vice president, regulatory compliance, for PolicyWorks. Contact her at

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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