Credit unions: Is one right for you?
Credit union membership topped 100 million in June, the Credit Union National Association announced this month.
It was a highly touted milestone for the member-owned banking institutions, which are often smaller and less understood than more traditional banks.
And now, SNL Financial, which analyzes the banking industry, has pointed out a new “mini-trend” — credit unions buying banks.
“A decade ago, this would have been unheard of,” SNL quoted Marvin Umholtz, a credit union consultant and president of Umholtz Strategic Planning & Consulting, as saying. “It seems like it’s been happening often enough in the last couple of years that it seems routine to me.”
SNL Financial says that it has seen six instances of credit unions buying banks in the last several years.
And last week, American Banker wrote about a Florida credit union working to buy a bank branch.
Mike Schenk, CUNA’s chief economist, says he is not sure he’d call credit unions buying banks a trend, but he also says he isn’t surprised to see credit unions buying banks lately. And he trumpeted credit unions’ growth in the last several years.
“Credit unions are today in a better place than they were four to six years ago,” Schenk says. “Credit unions have come through in better shape, relatively speaking, than the banking industry (after the economic downturn).”
Schenk says the kickoff to credit unions’ recent growth came in 2011 after the Bank Transfer Day campaign, which called on consumers to ditch their banks in light of moves by some institutions to add new bank fees.
“Since that time, it has not only maintained itself but accelerated,” Schenk says of the membership growth at credit unions. He says, “In the wake of the downturn, as banks were hunkering down and licking their wounds and turning people away, credit unions were actually refinancing some of those unfriendly loans that banks made.”
Recent surveys have shown that Americans report lower levels of trust in banks than in credit unions. But a lower level of trust does not necessarily equal switching to a credit union.
Bankrate has a slideshow to help consumers decide whether a credit union might be a good financial fit.