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CU System
IThe StreetI At CUs consumers fare better in economic squeeze
NEW YORK (8/23/11)--Credit union members are a "bit more comfortable" in the recession than bank customers are, thanks largely to credit unions' superior rates, according to The Street.com (Aug. 22). Low deposit rates have hit everyone, but "if you look only at credit unions, the numbers tell a different story," said the article, citing the Credit Power Index. The index measures the spread between the cost of borrowing and the benefits of saving by examining the difference between certificates of deposit rates at four terms and four loan product rates at the same terms. The higher the index, the worse things are for the consumers. At the end of July, credit unions' Credit Power Index figure stood at 17.55--nearly five points lower than the national average and more than 5.5 points better for consumers than the interest rate climate found at banks. "It's no wonder these nonprofit institutions have seen their number swell since the recession as Americans seek out better rates," said The Street. Credit unions "beat banks on deposit rates across the board," the article said. Banks have better mortgage rates, but on fixed mortgages in December, credit unions and banks were in a "statistical dead heat." However, some said credit unions had the advantage in that they typically charge lower fees as well. Credit unions also won on these other rates:
* For personal unsecured loans, credit unions charged 10.49%, compared with 12.54% charged at banks; * On 36-month home equity loans, credit unions charged 5.61% while banks charged 6.75%; and * On 48-month new auto loans, credit unions charged 3.68% while banks charged 4.72%.
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