Hotel Workers Suffering Credit Union Fees and Payday Loans
Inside Subprime: Oct 24, 2018
By Grace Austin
Hotel workers say they’re overly burdened by credit union fees and interest associated with short-term loans like payday loans, among other complaints, leading to an ongoing, multi-city strike around the country.
Some Marriott workers are saying they’re in financial trouble due to the lack of hours available to work, low wages, and exorbitant and continuous fees from the Marriott Employees Federal Credit Union. According to an October 2018 New York Times article, those charges include everything from overdraft to minimum-balance fees on checking and savings accounts.
Marriott is a $22.9 billion hospitality chain, with thousands of locations around the world and nearly 1,000 hotels in the United States and Canada. Fortune Magazine named it as one of the top 50 places to work last year.
The not-for-profit credit union is not formally connected to the company, but tens of thousands of Marriott employees are credit union members. And many of the board members work for Marriott. According to the Times article, the Marriott Employees Federal Credit Union’s fees are a much larger part of its assets than similar credit unions, and the average fees paid last year — $94 — are also higher than other comparable credit unions. And while the credit union considers the fees justifiable based on the services provided, ““the effect in many cases is that the people least able to bear the costs of operating a credit union are gradually paying more of them,” the Times reported.
The CEO of the Marriott credit union fired back to the Times that the credit union has to find a way to offset the lower deposits because so many of the employees are lower-income individuals. He went on to say overdraft fees have actually decreased by almost 10 percent since 2013.
The credit union is also accused of taking advantage of workers with short-term, high-interest loans. Meant to be a better alternative to payday loans, the loans still charge a $35 application fee, making the APR actually about 40 to 50 percent, despite the 18 percent APR cap for credit union loans.
The mini-loans can also lead to more overdraft fees, with a deduction every time a purchase goes over the account’s balance. This can lead to a cycle of financial strain, as the consumer must pay off the loan and the fees.
Meanwhile, thousands of Marriott workers are on strike around the country, in eight cities. Representatives say they’re holding out for a new contract, citing the need for higher wages, steadier hours and increased workplace safety.
For information on predatory payday loans, check out all of our Subprime Reports.