Make a New Year's resolution to move your money out of big banks? To that I say: Right on! Without question, financial consumers are angry at -- and have lost their loyalty to -- big banks. Late-night comics routinely make fun of the banks; there's even a new iPhone app in which players try to stop "cash-hungry" bankers from wheedling more bailout money from the U.S. Treasury, according to a recent report in American Banker newspaper.
But if consumers do indeed move their money out of big banks, they would be well advised to look not only at community banks, but at the nation's credit unions. In fact, consumers are already voting with their wallets in favor of credit unions. The data collected by my organization, (the Credit Union National Association -- the industry's trade group) shows that credit unions are on pace to post 2% membership growth in 2009. This is the fastest rate we have seen since 2001 and double the rate of U.S. population growth, bringing total credit union membership to nearly 93 million Americans. We think disenchantment with banks explains at least part -- and probably a large part -- of that growth in new members.
For consumers, the move makes perfect sense. Credit unions are not-for-profit cooperatives, and they're owned by their members. They offer the same products and services banks do, but unlike banks, credit unions exist only to serve their members -- not to generate profits for outside investors. Members typically experience that difference in the form of better rates and lower fees. In 2008 (the latest data we have available), consumers saved $9.2 billion by using credit unions rather than banks, or the equivalent of $104 per member and $198 per family. And that's just on average. Loyal members -- those who use credit unions extensively -- often receive total financial benefits that are much greater than the average.
But the issue goes beyond dollars and cents. In this turbulent economy, credit unions' cooperative business model has renewed relevance for American consumers. Chairman Barney Frank (D-MA) of the House Financial Services Committee has said if other financial institutions behaved liked credit unions and small community banks, the mortgage meltdown would never have happened.
You can't join just any credit union. Each credit union has its own specific field of membership centered primarily on where people work or live. But we're quite confident everyone can find one or more credit unions he or she is eligible to join; the locator tool on CUNA's consumer web site may help.
The time is right for consumers to resolve to move their money. We happen to think the best destination is a credit union -- as millions who have already gone there will attest.
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