While credit unions agree with the spirit of several recent proposals to create accounts for unbanked Americans, it believes those consumers would be best served by leveraging the system already in place, CUNA wrote to the Senate Banking Committee Tuesday. CUNA notes that community-based, not-for-profit credit unions are the original consumer protectors, and Congress should use its platform to encourage the use of credit unions, rather than passing legislation expanding the functions of other agencies, such as the U.S. Postal Service.

“We agree that consumers should have access to financial services, but we think that credit unions are the best organization to deliver financial services. That is why CUNA has advocated for solutions to help consumers access credit unions, including reduced regulatory burden, increased authority for credit unions to expand product offerings, and increased ability to expand fields of membership into areas in need of high-quality financial services,” the letter reads. “If the door to a credit union was open a bit wider, then the underserved and unbanked would be a lot better off.

CUNA adds that Congress can work with credit unions to increase awareness among underbanked populations, including erasing misconceptions about who can join a credit union.

The letter notes that membership in a credit union provides consumer protections and access not available through a FedAccount (one of the proposed services to be created for the underbanked):

• Affordable Products and Services: Credit unions provide best in the business products and services at lower rates than their bank counterparts. For example, as of December 2018, credit unions’ average interest rate for classic credit cards stood at 11.61% compared to banks’ average interest rate of 13.47%;
• Usury Cap: The Federal Credit Union Act and NCUA Board has set a usury cap of 18% for most financial products, including credit cards; and
• Broad Access for Consumers: The Shared Branching Network and other arrangements have established a wide-ranging, surcharge-free ATM network that allows a credit union’s members to use branches of other credit unions. This cooperative network ensures members have access their money almost anywhere.