NEW YORK–Why are people so obsessed with credit unions?
That is the headline that appears over an article on Money.com that seeks to provide some answers.
“The coronavirus crisis is forcing many Americans to take a hard look at their finances — and that includes re-evaluating where they keep their money,” the article states. “Banks may be the most obvious option, but if you’ve ever spoken with a friend who’s a member of a credit union, you’ve probably heard them gush about their financial institution. Credit unions tend to have pretty passionate fans. The only question is why.”
CUNA’s chief economist, Mike Schenk, is among those interviewed and explained that from a product, service and technology standpoint, credit unions are similar to banks. What sets CUs apart, according to Schenk, is the philosophy that extends from being not-for-profit cooperatives with a focus on members.
More Than Philosophy
It’s more than just philosophy, according to Carrie Birkhofer, president and CEO of Bay Federal Credit Union in California, who is quoted as saying the difference is in credit unions’ “DNA.” Birkhofer related how during the Great Depression banks would often turn away borrowers seeking small-dollar loans because they weren’t profitable.
“So people began to do it themselves. A group might get together at the office, for example, and raise $100 to lend to a colleague, knowing that he’d pay them back as soon as he could,” the report states.
“We don’t have shareholders demanding a market rate of return on investments, so we take the profits that would go to shareholders and we pass that through to member-owners,” Schenk told the publication, listing off benefits like lower fees, higher savings yields and favorable interest rates. “We’re just as good, and actually better than, the other guys.”
The Money.com report went on to cite research showing credit unions are perceived by their members to be more likely to act in their best interests, which is especially true in times of crisis.
There During a Crisis
“If you look back at any natural disaster, government shutdown and now during coronavirus, credit unions have always been there for their people — even before the government or the Fed asks them to be,” Jaqueline Ramsay, spokesperson for NAFCU, told Money.com. “They don’t wait for a regulatory policy or a call from a congressperson on the Hill to say, ‘Hey, I need you to help the people.’ They already have plans in place.”
The full article can be found here.