Although the average American may still be struggling, credit union members are socking away the cash. According to April’s CUNA Mutual Group’s Credit Union Trends Report. the average savings balance at credit unions moved beyond the $9,000 point.
Dave Colby, CUNA Mutual chief economist says that share drafts increased to 10.9% since February 2011, regular shares were up 9.3% and money market accounts rose to 7.9%. Certificates dipped demonstrating that although members were saving, they liked to remain liquid.
Credit Unions Report Individual Growth
Local credit unions across the country are experiencing strong deposit increases within their own membership. Grow Financial Federal Credit Union ($1.6 billion, Tampa, FL) reports an increase from an average of $10,000 in March 2010 to $10,367 as of March of 2012. “Our deposit growth is accelerating through the first quarter, partly because we have been able to afford to keep our deposit rates near the top of the market, thus returning as much as possible to our members,” says President and CEO, Robert Fisher. “In general, however, I think people have taken some money out to put in the stock market, and people continue to struggle with the economy. Although some people have found new jobs, their salaries are generally lower than what they were making before, and they continue to use savings to supplement paying their bills.”
Georgia United Credit Union ($900 million, Atlanta, GA) reports healthy growth as well. “Currently, our average deposit per member is approximately $6,750; this is about $1,400 more than this time a year ago,” says Kim T. Wall, Director, Public Relations & Community Development. “In 2010 and 2011, the average deposit per member were about $5,350 both years.”
Wall describes deposit growth over the past few years. “In 2010, we saw deposit growth of over 10%,” she says. “Excluding the merger deposits acquired in 2011, we grew deposits approximately 7.5%. Through March of 2012, we’re seeing annualized growth of nearly 20%.”
Affinity Plus Federal Credit Union’s ($1.3 billion, St. Paul, MN) deposits are up as well, keeping pace with the national average.
“We have seen a high level of member savings,” says Bill Urick, CFO. “This began with the recession and has continued. We have not seen a decline this year, but traditionally when the economy moves out of a recession and confidence builds the savings rate will decline.”
“Our average, share balance was $9,783 as of March 2012,” he continues. “This is up from $9,366 a year ago and 8,363% in March 2010. We continue to see an increasing trend in member savings.”
Credit Unions Promote Healthy Savings Habits
From educational programs to new products, credit unions have been ramping up the efforts to ensure members can keep more money in an insured credit union safe haven versus paying for a bank account.
Fisher explains that one reason why credit unions may be seeing more deposits is due to the consumers’ overall aversion to high bank fees. “Credit unions have become an attractive alternative to banks because of high banking fees,” he says. “In general, credit union deposit rates are higher than banks, and recent publicity over bank fees has drawn the attention of the general public to credit unions.”
“I think part of the reason that credit unions are enjoying growth in almost every area could be attributed to consumer dissatisfaction with banking fees and service charges in general,” Wall echoes. “Really, we should all send Bank of America a ‘thank you’ note for the announcement of their proposed fees last year. Even prior to ‘Switch Day’, people were actively looking for a financial institution that would not nickel and dime them for every little thing! And, the lingering recession forced consumers to focus on savings rather than spending.”
She adds that her credit union is fostering healthy savings habits through automatic savings through direct deposit and payroll deduction to new and existing members, along with a full range of savings products that includes CDs, MMAs, vacation and Christmas Clubs and a “You Name It” Savings that allows members to customize their own savings programs (such as “Kim’s college fund,” Wall says). “I think the economy should get the majority of the credit for the savings growth that we’ve seen,” she says. “When times are tough and money is tight, members do tend to squirrel away as much as they can and pay down debt.”
Urick says that Affinity Plus has introduced new products, found ways to pay competitive returns, and built a Participation Rewards program in a way that can greatly invent savings by allowing for certificate rate increases through the redemption of points. “Our Wahoo! Certificate has a competitive rate and encourages saving by allowing unlimited deposits throughout the 12-month term,” he describes. “The ‘Stash Your Cash’ program automatically rounds up purchases made with a debit card and transfers the money into a designated savings account. Through the Affinity Plus Foundation we focus on promoting financial literacy education in communities and schools to help foster an increased knowledge surrounding all aspects of personal finances - including savings.”
What Do Members Have To Say?
Stories about how a credit union has not only provided numerous savings outlets for members, but also financial education have flooded the news media. From hearing about how credit union business loans saved member companies to talking to members who were denied a basic savings account due to poor or no credit, but were given a second chance at a credit union; credit unions are proving to be the only way to bank for the next generation.
Urick shares a glimpse into how members have found ways to not only survive in a sinking economy but instead thrive. He refers to testimonials like:
"I have been a member for a long time - even before the Affinity name was rolled out. So long that my account number only has five digits! I have used Affinity for savings, checking, certificates of deposit, home mortgages, and car loans. I always found the rates to be better than other options. Keep up the good work."
~ Denise G.
"As I approached retirement, I knew I did not want to give up my long-time (30+ years) of being an Affinity Plus Federal Credit Union member. I have always valued the personal attention and careful assistance I receive from A-Plus. Yet, I knew I would be out of Minnesota much of the year.
I was delighted to discover how easily I could set up regular as well as intermittent payments via e-Pay, monitor and make transfers among my accounts online, and continue to be treated as a valued member. This last is important as I have heard from numerous retired friends who thought switching to a national bank would be more convenient as they traveled.
In truth, the national banks are like McDonald’s. Yes, you can count on finding them in every large city. But their convenience comes at a price. You’re not a member; you’re just a number to them. And now, these big banks are dreaming up even more services to charge for as their debit card fees have been reduced.
Affinity Plus affords me the convenience of electronic transactions while also assuring me that when I am in touch by phone, their focus will be on serving me, not on making a profit."
~ Monica M.
"Affinity -Two of my children are members and suggested I join a few years ago. Every person working with you has been friendly and helpful. Since joining, I’ve:
· set up a few saving’s accounts so I can easily separate my funds for household maintenance from mortgage payments from general savings.
· used my participation rewards to lower the interest rate on my car loan once and I’m close to being able to doing it again
· loved the popcorn in the Capitol site!
· refinanced my car loan and skipped a payment during last summer’s shut down.
· and most recently I took advantage of an offer to transfer my credit card balance with a much higher interest rate to my Affinity VISA card!
~ Lory P.
Wall shares a member success story relayed by E-Branch Call Center Manager Kari Singh. Singh says, “We have a long-time member who has lived from paycheck to paycheck for years and had significant NSF activity to the point that we closed his checking account about two years ago.”
“At that point he decided to take charge of his finances, he created and committed to live on a monthly budget, which he still follows today,” Singh continues. “Following a ‘pay down debt and save for emergencies plan’ we were able to reopen his checking account, he has improved his credit score by 100 points, and he had direct deposit and automatic transfers to make payments and savings deposits.”
Singh adds that the member now utilizes home banking – uses multiple secondary share accounts with the credit union instead of envelopes for budgeting (i.e., Dave Ramsey method), sold his expensive car and bought something used. “He paid off $17,000 in credit card debt and now has six months of expenses in reserves (savings) with us. He freely shares his story with others and encourages others to do the same.”
Need more proof that the credit union is the best way to save money and gain financial power? Find a credit union and inquire about the numerous savings vehicles today.