WASHINGTON—Credit unions consistently serve a higher share of households living from paycheck to paycheck than banks, according to America’s Credit Unions head of emerging issues and deputy chief economist, Curt Long.
Long cited a Federal Reserve’s Consumer Finance Survey that found just under 40% of households that use credit unions as their primary financial institution have liquid financial assets of less than two weeks of income, which is a higher ratio than that of banks (at around 35%).
“This result clearly shows credit unions are at the front lines serving households living in the margins,” Long said in his latest Economic Update video.
A Look at Branches
In addition, Long also addressed recent research from the Federal Reserve Bank of Philadelphia focusing on changes in branches since the onset of the pandemic. The report found the pace of bank branch closures has doubled since 2019, resulting in a 6% increase in census tracts without a financial institution branch, Long noted.
When it comes to the institution that closed the last branch in a tract, banks with more than $10 billion in assets created 62% of new banking deserts, despite only having 45% of total bank and credit union branches, Long said.
Credit unions closed the final branch in just 8% of instances, while credit unions “cured” banking deserts by opening a branch in a census tract with no previous branches in 36% of instances, he said, adding that CUs have only 20% of all financial institution branches.
What’s ‘Clear’
“When you put these two together, it’s clear credit unions are doing more than any other depository institution to address the needs for financial services in census tracts that other institutions are abandoning,” Long said.