CUs are superheroes, says N.Y. Times blogger
NEW YORK (7/28/09)--With the current financial crisis gripping the U.S., credit unions are stepping up like superheroes to offer better financial rates to the public, which has lost trust in large financial institutions, said an economics professor Monday in a New York Times blog.
"Credit unions always seemed like Dullsville to me," wrote Nancy Folbre, economics professor at the University of Massachusetts-Amherst. "I never bothered to check out the interest rates, much less the governance structure of credit unions I was eligible to join.
"But in the wake of the financial crisis, they began to look more like Clark Kent, who turned out to be Superman," she continued. "When the big American banks started sucking up to funds from the Troubled Asset Relief Program, or TARP, credit unions, with many fewer subprime mortgages on their balance sheets, started looking really good."
Conservative lending practices and a nonprofit status have bolstered credit unions during the financial crisis, and have allowed them to "offer higher interest rates to savers and charge lower rates to borrower than banks do," Folbre added.
When she called a local credit union, Folbre was told she could get a 4.09% annual interest rate when she opened a checking account if she agreed to cost-saving measures such as setting up an automatic payroll deposits, regularly using a debit card and receiving only electronic statements.
"This is more than 10 times better than what I was getting in my Bank of America checking or savings accounts ..." Folbre wrote. "Some small banks offer similar deals, and the benefits are often capped.
"Still, moving my money to the UMassFive College FCU made me feel at least briefly superhuman," she concluded.
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