SAN FRANCISCO (3/18/15)--A recent NerdWallet article illustrated what it would mean to consumers and the economy if credit unions disappeared from the financial services landscape. It isn't a pretty picture, the article notes, given the overall benefit they provide their members and communities.
"Credit unions save consumers a significant amount of money--$352 million annually in Oregon and Washington alone, according to a 2014 study by ECONorthwest, a consulting firm," wrote Virginia McGuire (NerdWallet March 16). "That amounts to about $63 per customer in Oregon and $76 in Washington."
Nationally, the average credit union member saves $74 per year, according to CUNA. Consumers also benefit to the tune of $8 billion to $10 billion annually because of the credit union not-for-profit tax status.
Credit unions can provide higher returns on account balances and lower interest rates on loans because of their not-for-profit, cooperative structure, explained John Worth, chief economist for the National Credit Union Administration.
The low rates and high returns also help consumers because they keep big banks on their toes by forcing them to compete with the credit union model.
Additionally, the loss of credit unions would mean the loss of critical resources in the community for low- to low-middle income individuals, according to Frank Cetera, board president of Syracuse (N.Y.) Cooperative FCU.
Credit unions far more frequently serve the underserved, or the financially disadvantaged, he said.
Added Worth: "It is often true that credit unions have flexibility and are more willing to work with their members."
The article also touches upon how credit unions maintained healthy lending principles before, during and after the financial crisis, which was largely created by the practices of big banks.