This is supposed to be the year of credit unions. This is their time. Or at least according to the Credit Union National Association, CUNA, which just celebrated its latest milestone: reaching 100 million members.

We know the background: banks have severely disappointed people. Credit unions promise to hold customers in a warm embrace of low fees and personal service. Over the past few years, the credit union memberships has been on the rise. CUNA chief economist Mike Schenk says that’s partly due to banks increasing the fees they were charging for their debit cards. In the last year, the credit union membership grew by 2.9%, adding 2.85 million new members. It was the largest increase in more than 25 years.

But who’s really leaving?



There might be another cause for the growth of credit unions. It’s not really the consumers who are leaving banks for credit unions. It’s banks who are leaving poor Americans behind. Many Americans are not banks’ ideal customers – not enough money, not enough transactions – and they are punished for it with a barrage of fees. In some cases, they are denied bank accounts altogether.

‘Spent: Looking for Change’ documents struggles of Americans locked out of the US banking system.

Fees punish those who don’t have extra money to spare. In fact, there are fees for not having enough money. Don’t have enough money to maintain minimum required balance in your account? There’s a fee for that. Wrote out checks for more money than you currently have in your account? There’s a fee for that. A new study by the Consumer Financial Protection Bureau found that often, the purchases or payments that trigger overdraft fees are actually less than the overdraft fee.



Many banks currently charge monthly “service fees” just to keep your checking account open. For example, Citibank customers have to pay $10 a month. The only way to avoid the fee is to maintain $1,500 in their accounts each month or have one direct deposit and one bill payment linked to your account. For many Americans, neither are an option. Bills add up. All of a sudden, their balance is less than $1,500.



Not every employer offers direct deposit, especially not those employing low-wage workers. So not only are these Americans struggling to keep money in their bank accounts, they are now being charged additional fees. At that point, for them, having a bank account is just not financially feasible.

As fewer banks offer free checking, consumers turn to credit unions. Photograph: Checking Survey/Bankrate

Small financial missteps, like bounced checks or overdraft fees, can keep Americans locked out of the US banking system, according to the New York Times. Using a database that tracks consumers’ banking transgressions, banks are able to weed out customers who they felt are not worth the risk, preventing them from opening basic checking accounts in the first place.

About 72% of nation’s 50 largest credit unions currently offer free checking to their customers, according to Bankrate’s 2014 Credit Union Checking survey. As for banks, that number dropped from 76% in 2009 to 38% in 2013.

Banks are in the business of making money. Poor Americans are not a good bet for them – they have too little money. It’s not the consumers who are turning their back on the banks, it’s banks who did it first. Left out in the cold, they go to the one place that welcomes whatever little amounts of money they have: credit unions.