By Sandy Bui
Daily Bruin, U. California-Los Angeles
(UWire)—Recent consumer backlash against Bank of America for debit card fees has raised questions about alternative financial institutions, like credit unions.
The now-axed $5 monthly charge to Bank of America customers who use their debit cards to make purchases was a result of the Durbin Amendment, a piece of 2010 legislation aimed at reducing the amount that merchants pay large banks for using their debit cards, said Scott Stane, vice president of strategic planning and marketing for University Credit Union.
One alternative financial institution, a credit union, is often not affected by the amendment because its assets do not exceed $10 billion, he said.
Credit unions are cooperatives that offer the same basic services as banks do—including checking and savings accounts and credit cards at lower costs, Stane said.
As not-for-profit institutions, owned as cooperatives by their members, credit unions do not pay some kinds of taxes; any money they make is put toward offering services and products at lower rates than banks, said Dean Baim, a visiting professor of economics at UCLA.
Any money credit unions make is put toward offering services and products at lower rates than banks.
While credit unions are gaining popularity, many students do not know much about them because they often come to school tied to their parents' financial institution, Stane said.
This was the case for first-year UCLA graduate student in education and Bank of America customer Andres Barajas.
"My father took me (to Bank of America) when I was 17 and just signed me up, and I've been there ever since," he said.
Barajas said the debit card fee has made him reconsider where he banks, however.
While Barajas has heard others talk about wanting to switch banks, he said he will wait to see what happenshe read that other banks are considering adopting the same policies.
Lindsay Niles, a UCLA fourth-year global studies student, is a member of Teachers First Federal Credit Union through her mother.
She said she can use a STAR ATM to withdraw money with no service charges, but she generally goes to Ralphs to get cash back, she said.
Other credit unions, including the University Credit Union, belong to the CO-OP ATM Network, which allows credit union members to use 28,000 ATMs nationwide free of charge, Stane said.
If you're looking for a credit union you might be eligible to join, check out ASmarterChoice.org.