The new CUNA Fees Report clearly defines some of the key advantages of belonging to a credit union. Consumers do better on interest rates and keep more of their hard-earned money through lower fees with a credit union membership.
It’s no surprise, then, to see the big bank lobby in some states criticizing our success and notfor- profit tax status as an unfair advantage that harms their Wall Street profits.
My view? We must be doing something right to attract their attention!
Consider these striking comparisons from our study. Of credit unions offering checking accounts, 79% had a free-checking option, while just 38% of banks did. Minimum balance requirements—which average $969 for credit unions and $6,211 for banks—also help illustrate the credit union difference.
These comparisons show that for consumers, belonging to a credit union can save them real money with better deals on savings and checking accounts, credit and debit cards, and other services. These fee differences with banks are having a bottom-line impact on the households of tens of millions of hard-working, middle-class consumers.
Credit unions continue to enjoy record growth as they welcome new members, and more current members turn to them as their primary financial institution.
Our growth and success have drawn banks’ attention. They’re once again spreading their anticredit union point of view.
CUNA economist Mike Schenk’s recent analysis points out the bankers’ flawed arguments. While credit unions continually demonstrate the advantage of membership, the big banks keep playing with smoke and mirrors, hiding from the facts (Credit Union Magazine, 4/15, p. 16).
For the past 25 years, banks have controlled about 94% of U.S. financial institution assets while not-forprofit credit unions have less than 7%. I’m scratching my head as to why they’re so concerned.
But let’s take a closer look. The plight of small community banks is quite different today. Their share of financial assets has shrunk to 19%, from 53% in 1990. While that’s still nearly three times larger than credit unions’ share, it’s a significant decrease nonetheless. This means the biggest banks now hold a staggering 74% of U.S. financial institution assets.
And yet, our not-for-profit credit union business model— made up of nearly 6,400 local, independent community institutions— provided more than $7 billion in direct benefits to consumers in 2014. And our presence in the marketplace saved bank customers about $2 billion through the competitive pressure we’ve had on fees and services at their banks.
Also, nearly half (49%) of credit union branches are in community development financial institution investment areas, while just 42% of bank branches are. Credit unions approve 64% of mortgage applications from low- and moderate- income borrowers.
One lingering effect of the financial crisis—inflicted on us by the big banks—is that home ownership still remains out of reach for too many Americans. But that’s not stopping credit unions from finding ways to help these consumers achieve the American dream.
So if anyone ever asks you about credit unions’ not-for-profit tax status, be proud. You have a great record of accomplishment that cannot be matched.
Now’s the time to tell our story of service and accomplishment— to be vigilant against the attacks on credit unions and the very foundation that empowers us. The result will be a positive and lasting difference for members.
JIM NUSSLE is president/CEO of CUNA.