Jul 7, 2009 5:10 pm US/Pacific
Credit Unions Lure Big Bank Customers
More Credit Unions Open Membership To the Public
SAN FRANCISCO (CBS 5) ―
If it seems as though your big bank is charging more or doing less to make you happy, you're not alone. Credit unions are gaining in popularity with consumers making the switch from big banks.
Sabina O'Sullivan is a new mom who decided life's too busy now to deal with her traditional bank.
"After having too many late fees and not being able to keep up with them... you know getting slapped for different reasons, I decided to switch over," said O'Sullivan of switching from Citibank over to the SF Fire Credit Union.
The number of credit unions is actually shrinking as they consolidate, but there are some 88-million members and more like Sabina migrating over from big name banks according to SF Fire Credit Union CEO Diana Dykstra.
She said while the traditional banking industry alienates consumers, with mergers and higher fees, credit unions are getting attention in light of recent changes of their own. They've invested in better technology and partnerships which make up for having fewer branches.
Credit unions are not-for-profits - they don't have shareholders to please. That's why only 5% of income comes from fees versus 40% for traditional banks.
"Our operation is to return value to members of the credit union which means better deposit rates, lower loan rates and less fees," said Dykstra. "We only have 2 fees and that is if a check gets returned or you're late on a loan payment and everything else is free."
Credit unions used to be restricted to certain working groups like firefighters or teachers. More are opening membership to general public. In many cases if you live, work, or go to school nearby, you qualify.
According to Datatrac Research, interest for checking, savings, money market and even consumer loans are better with credit unions over banks.
The banks do have a slightly better rate for a 30-year fixed mortgage (on July 7, 09). Fee structures, minimum balance requirements and restrictions apply, so it's best to research credit union options.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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