Imagine There Is No Credit Union
It doesn’t take much imagination to realize that vision could become reality--if credit union members sit on the sidelines. That’s because, right now, credit union members and the rights and services they enjoy are under the heaviest pressure ever from some bankers and banking trade associations. They’d like to eliminate credit unions, period.
Imagine there are no credit unions, and see what might happen to two consumers.
- Isaiah struggles to pay off school loans and charges about $150 a month on his credit card to make ends meet. He missed a few payments, which bumped up his interest rate. At a credit union, his interest rate may be 12%, but if he had that same credit card at a bank, with the same $3,000 balance, his rate may be 25%. With no credit unions, Isaiah pays $1,349 more in interest and fees.
- Hector and Alicia saved for a small down payment to purchase their first house, but it was less than 20% of the purchase price so they must pay private mortgage insurance. At a credit union, the fees may be about $600, but if they had that same home loan at a bank, with the same interest rate and monthly payment, the fees may be $2,500. With no credit unions, Hector and Alicia pay $1,900 more over the life of the loan.
| How Credit Unions Benefit Consumers | ||||||
| Imagine that there are no credit unions, and see what might happen to these consumers. | ||||||
| APR* CU/Bank | Term (months) | Fees CU/Bank | Monthly Expense CU/Bank | Total Expense CU/Bank | CU Savings | |
| Isiah credit card $3,000 balance |
12% / 25% | open | $0 / $35 | $400 / $400 | $4,004 / $5,353 | $1,349 |
| Mary used-car loan $10,000 |
6% / 10% | 48 | $0 / $0 | $235 / $254 | $11,273/ $12,174 | $901 |
| Hector & Alecia mortgage $110,000 |
6.5% / 6.5% | 360 | $600 / $2,500 | $733 / $733 | $250,298 / $252,198 | $1,900 |
This table shows how much better life is for these three consumers because credit unions exist. Source: CUNA's Home & Family Finance®
Remember, if credit unions aren’t there to put competitive pressure on banks to lower their fees, banks can charge what they wish.
Tell your friends about credit union's and encourage them to join. There is a big difference between credit unions and banks. We give back to our members.
