BETHESDA, Md.—Thousands of Marriott workers around the country are on strike, and some of their complaints center on fees they’re paying to their company’s credit union.
A national news report on the situation has suggested credit union fees continue to grow, and not just at the Marriott CU. The article was headlined, “Marriott Workers Struggle to Pay Bills, and Credit Union Fees.”
The Marriott workers are complaining that stagnant wages and unsteady hours have made it difficult to stay afloat financially at the same time some are alleging their credit union is adding to their struggles, according to the New York Times.
One Member Profiled
The Times report includes the story of Amos Troyah, who works as a dishwasher at the Philadelphia Marriott Downtown, who made $30,000 in a recent 12-month period.
“Roughly $2,000 of it was spent on an especially frequent expense: fees on his checking and savings accounts at the ($192-million) Marriott Employees’ Federal Credit Union,” the Times stated. “The fees came in increments like $6 and $10 — minimum-balance fees, excess-transaction fees, automatic money-transfer fees. On occasion, they were joined by that pooh-bah of personal finance charges, the overdraft fee, at a hefty $35.”
Other employees said Troyah’s experience with fees was common, the Times said.
The Times noted that for more affluent Marriott employees, credit union membership can be a very good deal.
“Typical interest rates on car loans and mortgages obtained through the credit union are below the national average, according to financial filings. And better-paid employees less frequently need services that incur high fees, like overdraft protection,” the Times said. “What’s more, while the credit union is officially independent from Marriott, the board that oversees it consists primarily of Marriott managers who may not always be sensitive to the inequities these policies impose.”
“The Marriott workers’ experience is a stark example of trends that are increasingly bearing down on the nearly 100 million people nationwide who have credit union accounts,” the Times concluded.
Credit Union Responds
In response to the hotel workers’ allegations, the Times quoted Glenn Newton, CEO of Marriott Employees FCU, as stating that due to the CU members “modest wealth,” the credit union is left with less money for generating income.
“In effect, he said, the credit union must pay the same costs per member as other credit unions, but has fewer ways to offset those costs,” the Times noted.
The Times said Newton urged adjusting the analysis to account for the small deposits — say, by considering how much greater its assets would be if its average deposit was more typical of the industry. That would bring the fee ratio in line with other service-sector credit unions, the Times story states.
“As a practical matter, however, the fees that an average Marriott credit union member pays across all services — $94 last year — are far higher than at these other institutions, and higher than at credit unions of a similar size,” the report states.
CU Fees Detailed
The Times went on to add that credit unions were originally founded to serve lower-income workers that lacked access to the same financial services as middle managers or executives.
“Some credit unions still see their mission in such terms. But in recent decades, many have subtly shifted their approach,” the Times said. “As falling interest rates made loans less lucrative, credit unions largely turned to fees to help replace the lost income. Over the past quarter-century, the average value of the fees collected for every dollar of interest income has risen to nearly 17 cents, from just under seven cents.
“For credit unions harder pressed to fund their operations, that figure can get much higher,” the report continued. “The GE Credit Union of Connecticut makes 34 cents in fees for every dollar of interest on loans, according to last year’s regulatory filings. The Montgomery County Employees Federal Credit Union in Maryland makes 44 cents. But even against this backdrop, Marriott is an outlier. It takes in 52 cents in fees for every dollar of interest income.”