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Consumers Save Billions At Credit Unions Following Economic Collapse

Consumers Save Billions At Credit Unions Following Economic Collapse

Last week the Credit Union National Association’s Economics and Statistics Department (CUNA) announced that 93.3 million credit union members save $6 billion a year through more competitive rates and lower/fewer fees.

In CUNA’s press release, the REAL Solutions Scorecard for Wisconsin Credit Unions reported that Wisconsin credit unions alone have saved members $1 billion since the recession began in 2007.

"Credit unions are united for good," stated Brett Thompson, Wisconsin league president/CEO. "The scorecard provides a clear picture of how credit unions build financially strong, self-sufficient families, business and communities in Wisconsin."

Other leagues across the country report that credit unions in their footprint have saved their members cash as well. For example, Patrick S. Jury, CEO/President of the Iowa Credit Union League says that credit unions saved Iowans more than $76 million in better rates and lower fees last year.

In The Gazette, Jury writes, “Consumers benefit by having credit unions in the financial marketplace. While Iowa credit unions make up only 10% of this market, this competition creates a better environment for consumers and keeps bank fees from getting even more outrageous.”

Money Saving Opportunities Extend Beyond Credit Union Services

Leigh Brady, CUDE, SVP/Education Services at State Employees' Credit Union ($25 billion, Raleigh NC) says that the credit union presence puts pressure on the financial institution industry in general, which encourages further savings for all consumers.

“Our competitive rates and fees puts pressure on other financial institutions so even if the member can find a better deal elsewhere, that offer may not have been available if it weren’t for having to compete with credit unions,” she says.

She adds that the credit union movement is ultimately about the member. “It’s difficult to quantify exactly how much money we save our members because if they can save more money by going down the street to another financial institution or by taking dealer financing with no other fees, we will advise them to go in that direction. Our philosophy is about being the member’s trusted advisor.”

Last year the credit union commissioned an independent financial savings report led by Dr. William E. Jackson III, Professor of Finance, Professor of Management, and the Smith Foundation Endowed Chair of Business Integrity in the Culverhouse College of Commerce at the University of Alabama.

Dr. Smith’s research concluded that the individual SECU member saved an average of approximately $376, or about $752 per member household (assuming two members per household) in 2001. Overall, the credit union saved the collective membership approximately $648,834,596 during the same year.

Credit Union Programs Designed to Save Members Money

Brady says that the credit union also actively seeks ways to save members money. “The biggest program is our salary advance loan program, which is our answer to the payday loan.”

Not only is the loan associated with a lower than payday lender industry rate of 12%, the credit union built in a savings feature so the member has no choice but to learn money saving habits.

“We require the member to save at least 5% with the maximum amount on a loan is $500,” Brady says. Once the member saves $500 (or more) the loan rate is lowered to 5.5% and the savings component is increased to 7%.

“Many members view this as more of a savings than a loan program. Especially when you compare the interest rate of 350% under one of those national umbrella stores. Once the consumer gets involved with a lender like that there’s virtually no way to recover.”

She says that other programs, like the credit union’s mortgage recapture initiative puts credit union savings front and center in the member’s hands. “Sometimes the member doesn’t have the time or hasn’t looked into a better rate. It’s our job to develop offers like this, communicate with our members and let them know there is a better way.”

Credit Unions Create Money Saving Opportunities for Businesses

In addition to assisting retail-based members, credit unions throughout the country continue to focus and fight for the small business owner.

For example, since 2007 Wisconsin credit unions increased business lending power by 55% to assist local struggling business owners who were turned away from banks due to the credit crunch.

In December, Credit Unions Online reported that Florida credit unions grew member business loans (MBLs) 7.9% during three quarters of 2012 and Alabama increased MBLs 7.6%. The League of Southeastern Credit Unions reports that growth numbers also represents a 5% plus increase in MBL growth over 2011.

The industry continues to push lawmakers to increase the MBL cap from 12.25% to 27.5% of credit union assets. CUNA asserts that increasing the cap would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.

Find out how much money your credit union can save you. Find a credit union today and keep more money in your wallet.

By Gina Ragusa
Published February 4, 2013
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