Wall Street Journal Touts Credit Unions

For obvious reasons, many Americans are pretty unimpressed with the banking industry right now.
So maybe it's a good time to look at an alternative – like moving your account to a local credit union instead.

These not-for-profit co-operatives have a kind of sleepy, backwater image. They're often seen as the local libraries of banking. But that's too bad. The chances are they didn't pay their chief executive $10 million while writing off billions in subprime loans. And they can offer you some surprisingly good deals.

"Credit unions very often beat their banking counterpars in terms of offering lower rates on loans and higher rates on deposits," says Greg McBride, economist for Bankrate.com. "For a consumer who's shopping around for the best deal, that has to include looking at credit unions." Nearly 90 million Americans already do some banking at a credit union and that figure rose by more than one million last year, according to the industry trade body, the Credit Union National Association. Total deposits are about $800 billion. Credit unions have been around for nearly 100 years – the first one was launched in Manchester, N.H., in 1909 - and there are now 8,500 of them around America. They traditionally grew up around a particular community or the employees of a big company, and their membership is limited to a defined group. As non profits, they are exempt from taxes.

In normal times, credit unions boasted that they could offer a better deal than banks because they didn't have to make profits for outside shareholders.
Of course, these days the same goes for a lot of traditional banks as well. Instead, the new "no longer in profit" (NLIP) sector is losing billions. Big banks are currently passing the hat around Wall Street, Washington, Singapore and Dubai looking for help.

So instead many credit unions can boast that they don't have to pay for billions in losses on subprime mortgages and other bad loans. As an added bonus, few of them waste money on expensive marketing and advertising campaigns, takeovers, huge executive bonuses, and the kind of costly "growth" initiatives that CEOs chase to give their stock options on Wall Street the needed juice.

Being stuck in the past has its benefits. You could take this for some kind of metaphor for our finance industry. Once upon a time, Washington Mutual was a "not for profit." In the past year it's lost $6.1 billion after tax.

So if you are looking at moving to a credit union, what do you need to know?

Go to creditunion.coop, the Web site run by the trade organization, to find credit unions near you.
Look for credit unions you are allowed to join. Each one is restricted to offering membership to a predetermined group, like employees of a company, members of an organization, or those who work, live or worship within a neighborhood, county, or area.
If you are concerned about safety, pick a credit union where deposits are insured by the federal government through the National Credit Union Administration (NCUA). About 98% are. Look for an NCUA blue sticker on the window – or just ask. The NCUA works for credit unions the way the FDIC works for banks. It guarantees deposits up to $100,000, and there are higher limits for some joint and retirement accounts.

Before signing up, also look at the range of services on offer as well as the number of branches. Credit unions tend of offer far fewer of both than banks. (That may not be a bad thing. I happen to notice that the credit union in my area with the fewest branches, products, services and exciting innovations also seems to offer by far the best deal on straightforward checking and saving. There's a much bigger credit union near me that seems to behave like a bank – it even advertises like a bank – and yes, it seems to charge fees like a bank too.)

If you need credit and debit card, make sure it offers them. If you need ATM access on the road, make sure your credit union is a member of the Coop Network. Other members won't hit you with a surcharge if you use their ATMs.

And be willing to cherry pick. You can take advantage of your local credit union's great CD rates while leaving your checking account at Greedy Bank, Inc.

Study: CUs look good, trust drives wallet shares

BOSTON (8/15/08)--Consumers' trust in their primary financial institution is directly correlated to wallet capture--and credit unions are doing well, indicates a study released this week.

Credit unions are outperforming banks in rates, fees, pricing, products, reliability and engagement, according to the study, by Mercatus LLC, a financial services consulting firm (MarketWatch Aug. 13).

The average wallet capture share for financial institutions increased by 18 percentage points on a five-point scale, from 34% at a trust score of 1, to 52% with a trust score of 5, the study said.

Trust relationship scores for credit unions and banks ranged from 64% to 84%. Credit unions and local banks scored higher in transparency than other financial institutions at 75%, compared with national banks' average score of 63%.

Factors affecting trust include transparency of costs, employees' willingness to go "above and beyond," and operational processes clarity. Trust also drives retention and cross-selling other products.

To build trust, the study said financial services providers should:

Disclose fees for products and services;
Explain steps to open new accounts or address service issues;
Ensure safety of members' information; and
Maintain fees at levels members expect.

Service One Credit Union's fees are the lowest in this region.

Hi friends,
I recently returned from Hong Kong where the World Council of Credit Unions conference was held this year. Service One has supported this organization for ten years and we have seen great progress in the number of people served across the globe by credit unions. People are so grateful to have a financial institution that cares about their needs, not one that is out to enrich stockholders. Many WOCCU projects serve many small communities and allow financial independence to overcome abject poverty. What a wonderful group for us to be associated with!!

Dr. Richard Miller, Chairman of the Board at Service One Credit Union, presented a break-out session on some original research that he conducted on CEOs from Ireland, Canada, Australia, and the US. His session was highly rated as we can be proud to have had him represent us.

Another US speaker, Senator Paul Sarbanes (of Sarbanes-Oxley fame) talked about the importance of transparency and accountability in organizations. Speakers from six continents inspired attendees to continue their work.

"Credit union leaders from around the world met in Hong Kong for the 2008 World Credit Union Conference, July 13-16. WOCCU's World Conference is the only meeting of its kind, bringing together credit union leaders from countries from around the world. In addition to providing excellent networking opportunities, the four-day program focused on current industry issues and innovative ideas that can be implemented in credit unions everywhere."

Here's another innovative scam method. Beware.

Credit unions across the country are reporting that their member’s are receiving unsolicited text messages. It’s an attempt at Smishing—the latest form of phishing. In Smishing, an e-mail tries to lure a recipient into giving personal information via SMS, the communications protocol used to send text messages to a wireless device. The recent scam is targeting credit union and other financial institution members.

In smishing, the members receive a text message via cell phone warning that their bank account has been closed due to suspicious activity. It then tells them they need to call a certain phone number to reactivate the account. Unsuspecting callers who dial the number provided in the text message will be taken to an automated voice mail box that prompts them to key in their credit card or debit card number, expiration date, and PIN to verify their information.

If you have a question concerning your account or credit/debit card, contact your financial institution using a telephone number obtained independently, such as the phone number from your statement, a telephone book, or other independent means.

I received the following letter yesterday and asked permission to print it for your reading enjoyment.

Dear Ms. Brown:
I am the daughter-in-law of Bill Steinwachs, married to his son Bill Jr
for 24 years. I just finished reading the story in our local paper, The
Gleaner, about the harvesting of the timbers from the Poole Mill. That
the wood has been saved from deterioration and will be restored as part
of such a worthwhile project is the perfect way to preserve the backbone
of the Mill, along with its history. As a young boy, my husband got off
the school bus every afternoon at the mill to help out with afternoon
tasks, and spent many Saturdays with his cousins bagging feed made from
loads of corn farmers hauled in. He recalls arriving at the Mill on
Saturday mornings at 6 am to find up to 20 farmers already in line with
their loads of grain to be ground into feed for their livestock. The
Poole Mill was truly a family business in every way. My husband has a
work ethic that exceeds many that I have encountered in my lifetime,
born of his work at the Mill and on the family's farms.

Should your credit union have a grand opening ceremony when the new addition is
completed, we would love to visit and bring our 8 year old daughter
Kelsey to see a piece of family history become part of environmentally
responsible construction at its finest.

Sincerely,
Kelly Steinwachs

Today, the Poole Milling Company's building no longer stands on the main thoroughfare of Poole, Kentucky. Service One Credit Union offered to level this historic, yet now dangerous, abandoned structure and use the timbers from three floors in its "green" addition. The owners, Jim and Bill Steinwachs, agreed to sell the timber when they were assured that the history of their former feed business would be displayed at the Credit Union's Campbell Lane Branch.

The original Poole Mill was built in 1830, destroyed by a devasting fire in 1923, and rebuilt in 1924. It served Webster County, Ky for nearly 150 years producing flour, meal, and animal feed.

Dr. Marvin Russell, former Dean of Ogden College, WKU, was born across the street from the mill. He remembers hearing the single piston engine chugging throughout the day - "not an unpleasant sound as I remember." He also recalls skating and fishing in the mill pond, exploring the mill's inner depths, and even working for the owners during the summers of his boyhood. Dr. Russell, a member of Service One Credit Union since 1975, offered valuable assistance in facilitating the purchase of these beautiful timbers. He stated, "The town's people believe that most of the timbers were from virgin trees."