Current accounts in credit unions: Do they add up?

The news that dozens of credit unions across the country are set to take on the banks by offering current accounts for the first time has been broadly welcomed.

Some 30 credit unions with 115 branches nationwide are taking part in the scheme and have rolled out a full range of current account services, including overdrafts, standing orders and direct debits, as well as a Mastercard debit card.

But, for most consumers, the question will be about how the pricing structure compares to its market rivals?

Monthly account maintenance fee

Credit union current accounts will be subject to a €4 monthly account maintenance fee, charged quarterly.

This is the second most expensive monthly maintenance fee on the market when focusing on standard personal current accounts. It is only beaten by An Post, which charges €5 for monthly maintenance.

In comparison, Ulster Bank charges €2 per month in maintenance fees, and Bank of Ireland charges €5 per quarter for maintenance. AIB charges €4.50 per quarter for maintenance, and KBC €6 per quarter.

ATM withdrawals, debit card, contactless charges

Users of the new credit union current accounts will not be charged for debit card point of sale and contactless transactions in euro.

They will also be able to make up to five withdrawals from ATMs per month within the SEPA zone without being charged. If they go over this limit, they will be charged €0.50 per transaction.

For Bank of Ireland current account customers, contactless transactions are charged at a rate of 1c per transaction.

Automated transactions, including the use of visa or debit cards, cost 10c per transaction, while lodgements and withdrawals using ATMs cost 25c per transaction.

AIB charges a set rate of 20c transaction fees for debit card purchases and contactless and 35c for ATM withdrawal.

At KBC, there are no fees for ATM withdrawals, contactless or debit card purchases in the SEPA zone, while Ulster Bank charges 1c per transaction, including Apple and Google Pay, and 35c for ATM withdrawals.

Direct debits, standing orders, internet banking

Credit union current account users will also have free direct debit and standing order processing.

They won’t be charged for electronic payments into and out of their accounts, and they will have free mobile and internet banking.

Currently, they will not have access to services like Apple Pay or Google Pay, though it is hoped that these will be rolled out in 2020.

Unlike their credit union counterparts, Bank of Ireland customers are subject to charges for some of these.

Direct debits and standing orders cost 10c per transaction, while banking transfers done through phone/online or mobile banking also cost 10c per transaction.

Bank of Ireland also does not have the facility to support Apple Pay or Google Pay.

AIB charges 20c for standing orders, direct debits, automated debit and credit transactions, including those done online. It does support Apple and Google Pay, though.

These are free at KBC, which also supports payment apps, while Ulster Bank charges 20c per direct debit, standing order and payments into accounts.

There are additional charges for users of all account types for bounced cheques, failed direct debits or standing orders and, typically, in-branch transactions of any kind.

All banks offer options to avoid fees, typically by lodging or keeping a certain sum in your account each month. These vary depending on the bank and the account.

Daragh Cassidy of comparison site Bonkers.ie said the arrival of credit unions into the current account market is “a little overdue”.

A previous attempt to do so three years ago hit a stumbling block when the Central Bank raised fears about its compliance with regulatory requirements.

While choice is always a good thing for consumers, this new account offers little new and its pricing isn’t overly competitive. In fact, depending on how you use your current account, there are cheaper alternatives from the likes of KBC and Permanent TSB already.

"And in terms of online features, N26 and Revolut offer far more than any Irish bank or the credit union can at present.

“However, the charging structure is fairly simple and straightforward so customers should at least be able to know what they’ll be hit with in terms of fees each quarter. But the account wouldn’t really be suitable for those who prefer cash over card payments,” Mr Cassidy said.

Credit unions have always prided themselves on the personal touch and customer service and this could be its unique selling point, Mr Cassidy added.

He continued, “The level of switching in the current account market in Ireland is chronically low at less than 0.10%. As a result, the credit union will have its work cut out for it trying to persuade people to switch, especially given the huge popularity of N26 and Revolut at present.”