Lower Interest Rates, Fewer Fees... Have You Considered a Credit Union?

By Elizabeth Archerd, Member Services Director

Two events this past winter left me with one question: why doesn't everyone who can, join a credit union?

Event One: Congress passed a new bankruptcy law. Analysts noted that credit card issuers contribute to economic distress when they increase the interest rate on credit card balances - up to 30% in some cases - when their customers fall behind on bills, not their credit cards mind you, bills! They may also start piling on late fees and penalties that also accrue interest at the new rate. This can happen even though the consumer has made all scheduled payments on the credit card bill itself.

Event Two: Minnesota Attorney General Mike Hatch went after a major credit card issuer for falsely advertising a fixed rate, when the fine print on the agreement contains provisions such as those outlined above.

I quickly read the Terms and Conditions Agreement that applies to my credit union Visa. Interest rates only rise after a card holder is tardy paying the Visa bill itself for three consecutive billing cycles. Even then the highest rate, on the Classic card, is 18% APR - up only a little from the regular rate of 15.85% APR.

Why would this be? The answer's simple. Like the Wedge, credit unions are member-owned cooperatives that exist to serve their members, not to generate profits for investors. Credit unions serve their members' need for credit with the money deposited by other members, as a sort of money-recycler. It's the original "community reinvestment banking" concept in action.

People who experience "banking" credit-union-style can become as loyal to their CU's as Wedge members are to their co-op. They get used to being treated as more than just customers, and they get used to the lower fees and better rates that are available to them because their credit union isn't required to provide stock holders with comfy dividends.

Besides being owned by the people they serve, there are other parallels between retail co-ops and credit unions. They share a strong commitment to their communities and to fundamental fairness. Credit unions didn't "red-line," for example. Red-lining was a practice (now illegal) in which banks denied credit to people based on their addresses (i.e. low-income neighborhoods) without regard to their personal credit histories.

My credit union even offers a program that reminds me of the Wedge's patronage refund. It's called User's Credit. This program awards members points for using CU services. The points are translated into dollars that are deposited in member accounts each November. Does your bank make an extra deposit in your account every year? Members who have User's Credit earn 1% on everything charged on their Visas all year, even if they pay their balances in full each month. Oh - and they don't call people who pay their bills in full to avoid interest "deadbeats." That's what the banking industry calls you if you don't carry a balance.

City-County Federal Credit Union (my very own) can now offer membership to anyone who lives, works, worships, attends school or owns a business in Minneapolis. They have a new building on Franklin Ave. which should be open for business by the end of May. Twin Cities Co-ops Federal Credit Union offers memberships without an additional fee to co-op members and employees, and nearly anyone in Minnesota and Wisconsin can join. We have membership information for both credit unions at the Customer Service Desk, or you can visit their web sites listed above.

Both are financially sound institutions which offer you a way to extend cooperative values into your financial life. Now almost anyone who belongs to the Wedge can join a credit union. What are you waiting for?