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CNN Money: Credit Unions Are Best Borrowing Alternative

Credit unions are the best borrowing alternative for consumers who are fed up with big U.S. banks, according to a recent CNNMoney article.

Although they offer similar services to banks, credit unions are not held captive by the bottom lines of their balance sheets or shareholders, the article said. That structure usually allows credit unions to provide more favorable terms for borrowers, Bankrate.com's Greg McBride told CNNMoney.

The average five-year new-car loan is 3.5% at credit unions versus 4.9% at banks, according to Informa Research Services, a CUNA Strategic Service provider quoted in the article. 

For home equity lines of credit, credit unions offer a 4.4% interest rate, and banks 4.7%, on average, said CNNMoney.

Although fixed-rate mortgages are roughly the same at credit unions and banks, consumers likely will save hundreds in fees and have more direct access to decision-makers at a credit union, the publication said. 

 

ABC News - Switch To A Credit Union to Fight Bank Fees

Ways for consumers to fight back against escalating fees at banks - including switching to a credit union - were featured on "Fighting Against Bank Fees," a segment that aired Tuesday night on ABC News.

Most banks now charge a fee for non-interest checking accounts, said Consumer Reports on Eyewitness News on Channel 7 WABC-New York. Most of those accounts were free two years ago. ATM fees and overdraft charges also are setting record highs.

Consumers can combat this hike in fees, said Consumer Reports. If consumers are assessed a fee, they should ask their bank to waive it. If the bank refuses, they should move their accounts. Consumers who decide to move their money out of banks should consider a big credit union, said Consumer Reports' Kim Kleman. The fees for basic checking at major credit unions are on average 42% lower than at big banks.

"Credit unions used to serve just small groups," Kleman said. "But that has changed. Now it's pretty easy to find one you can join. 

In addition to the segment, a recent Consumer Reports article also lists some steps to take before switching accounts to make for an easier transition.

To view the segment, click here.

 

Financial Industry Forecast

Consumers are becoming increasingly frustrated with big banks for a variety of reason: poor lending practices that helped sink the economy, government bailouts, foreclosures, huge CEO bonuses, and now higher fees and strict account requirements.

Industry experts predict that banks will continue to experiment with fee increases, tougher account requirements, cost-cutting, and new sources of revenue, such as sharing customers’ marketing data.

“Banks are closely examining what costs they can eliminate and where they might be able to charge, and what the market will bear and not drive customers away,” says Beth Robertson, director of payments research for Javelin Strategy & Research in California.

It’s likely the megabanks will lead the pack, as small institutions wait to see whether they should follow along or court angry customers by offering better deals.

Here’s what to expect from banks in 2012:

  • A push on electronic banking and fees on in-person or telephone banking.
  • Higher fees for overdrafts or other penalties.
  • A big push to encourage credit card use, including shrinking grace periods.
  • Less-favorable loan rates and higher loan fees.
  • Charges for premium services such as safe deposit boxes or online tools.

Of course, you don’t have to pay the price for banks trying to make up billions in lost revenue due to the bad economy, new regulations and, in some cases, even their own inefficiencies. If it makes sense for you to switch, you have several options. Many credit unions have expanded services to match what you’ll find at a bank. Since they’re nonprofit institutions that exist solely for the benefit of their customers, fees tend to be lower.

Click here to read the entire article. 

 

Credit Unions Set All-Time Record for Customer Satisfaction

Credit unions have set an all-time American Customer Satisfaction Index (ACSI) record, with 87% of credit union members surveyed saying they are "more satisfied than ever before" with their credit unions.

The 87% score was the highest score reached in any of the ASCI's 47 industries that it surveys, and credit unions have consistently received high praise for their member service in this survey.

Credit Union National Association (CUNA) President/CEO Bill Cheney congratulated credit union boards, management and employees for the record-breaking survey results. "Given the enormous outpouring of consumer interest in credit unions over the past several weeks--and the apparent growing dissatisfaction among consumers with megabanks--it can be of little doubt that, the more consumers learn about credit unions, the more they see how credit unions can help them fulfill their financial needs and goals," he added.

The ASCI survey found that bank customer satisfaction stands at 75%, and that total decreased by 1.3% over the past year.

ACSI founder Claes Fornell noted that grassroots efforts like Bank Transfer Day, and recent consumer revolts over higher bank fees, are creating issues for banks. "While it is too early to quantify just how much business the big banks have lost to smaller competitors, the new ACSI data suggest credit unions and smaller banks now have become an even more attractive alternative for consumers," Fornell added.

Approval for the biggest banks was even lower, with 73% of Wells Fargo and Citigroup customers saying they were satisfied with the service at those institutions. A total of 70% of JPMorgan Chase customers said they were satisfied with that bank's service, and a mere 68% of Bank of America customers approved of that financial firm's customer service.

To see the complete survey, click here.

 

RACOM Membership Approves Merger with DuTrac

Proposed merger would create a $517 million credit union serving over 42,000 members throughout 14 counties in the Tri-State area.

Dyersville and Dubuque, IA – On November 29, 2011, during a special meeting, the membership of RACOM Community Credit Union (RACOM) overwhelming voted to approve the proposed merger between RACOM and DuTrac Community Credit Union (DuTrac). The merger vote took place after receiving preliminary approval from the Iowa Division of Credit Unions and the National Credit Union Administration.

The merger is to be completed by December 31, 2011.

The merger will combine two financially strong, successful credit unions with shared northeast Iowa roots in the manufacturing industry. In addition, complementary operating philosophies and membership bases will only increase the value each brings to their members, communities and employees.

The combined entity will continue to be called DuTrac Community Credit Union with Andrew Hawkinson as president and CEO. The RACOM name will remain on the Dyersville location for the next two years with signage incorporating the look and feel of the DuTrac logo along with the words “A division of DuTrac Community Credit Union.”

The newly combined organization will have 11 branches throughout a 14-county region bordering the Mississippi River serving the Tri-State region of Iowa, Illinois and Wisconsin.

“This merger is an excellent opportunity to be able to bring members so much more from their credit union, with greater convenience through more points of contact and expanded service offering such as real estate, trust, investment and insurance services. The larger organization will be able to leverage certain operational economies of scale that will benefit the membership,” stated Dan Deutmeyer, President of the Board of RACOM.

“What really made this merger work is that we have the same philosophical roots and a similar member demographic. Ultimately the shared culture of focusing on the members’ needs was the deciding factor in the merger taking place. We are excited to welcome all the RACOM employees into the DuTrac family along with Dan Deutmeyer to the Board of Directors,” stated Don Pfohl, Chairman of the Board for DuTrac. It’s a ‘win-win’ for both organizations.”

DuTrac Community Credit Union, headquartered in Dubuque, Iowa is a full-service community credit union owned by and serving over 40 thousand members. DuTrac has $505 million in assets, serving 14 counties in the Tri-State region with ten office locations.

RACOM Community Credit Union, headquartered in Dyersville, Iowa is a full-service community credit union owned by and serving over 2300 members. RACOM has $12 million in assets, serving four counties in Northeast Iowa. www.racomccu.com

DuTrac Sponsors Kids Concert Program

For the 19th year, DuTrac Community Credit Union will sponsor the Kids Concert program for Dubuque and surrounding areas. Each year, thousands of Tri-State listeners enjoy the wonderful sounds of area elementary students performing a variety of holiday selections. 

“For nearly two decades, the Kids Concert program has brought the spirit of the holidays to the area,” shared Jason Norton, vice president of marketing and business development at DuTrac Community Credit Union. “DuTrac is proud to provide the community with the wonderful sounds of area youth performing with their choirs, bands, orchestras or classrooms.”

Click here to view the schedule of Kids Concerts to be broadcast on KAT FM 92.9 radio from December 1 through December 23.

Click here to view the schedule of Kids Concerts to be broadcast on KDST FM 99.3 radio from December 11 through December 24.

 

U.S. News & World Report: Seven Ways Credit Unions Are Better Than Banks

 In the aftermath of the Occupy Wall Street movement, a U.S. News & World Report article noted that many Americans are looking to do business more with local businesses and financial institutions, as opposed to large corporations and banks.

The publication listed "seven ways credit unions are better than banks." Credit unions:

1. Make consumers a top priority. Credit unions work in the best interest of members, not stockholders. Therefore, they offer better customer service. Credit unions are more focused on ensuring they provide members with a high level of service and competitive rates. 

2. Have low or no minimum-balance requirements. Credit unions lower balance requirements so maintaining an account is less stressful, while corporate banks continue charging high fees for dropping below a minimum balance on savings and checking products.

3. Offer lower fees on financial products. When they shop around for a loan or a checking account, consumers will find that credit unions usually offer lower fees on basic transactions. A local credit union can probably offer the best financial products and packages. Most credit unions still offer free checking with no strings attached

4. Have lower interest rates. Credit unions usually offer lower interest rates on mortgages and credit cards. Many offer the most competitive rates for mortgages, personal loans and credit cards. Nonprofit credit unions also are less prone to add on fees for different loan products 

5. Secure the member's funds. Deposits at a credit union are insured up to $250,000 by the National Credit Union Shared Insurance Fund. Members have the same level of risk as customers at a regular bank.

6. Offer bonus checks. Profits can be divided up into bonus checks for members rather than shared with a few stockholders. Members should check with their local credit unions to find out what types of bonus programs are provided to members annually.

7. Are less restrictive in credit eligibility requirements. Consumers should consider applying for a loan through a credit union if they've been denied a loan from a large bank. Many credit unions are willing to work with consumers who have a low credit score. Credit unions also can make exceptions for unique circumstances--such as going through a bankruptcy or being self-employed.

In another article published last week, U.S. News & World Report advised consumers who are looking to credit unions to check out membership requirements, fees, availability of services and interest rates. The article also urged consumers to check that a credit union they are interested in is insured by the National Credit Union Administration.

Credit Unions More Efficient Than Banks

A new Celent study comparing efficiency ratios of similarly sized banks and credit unions says that credit unions are about 10 points more efficient than banks. 

Boston research group Celent noted in its study, "EfficienCU: An Examination of Bank and Credit Union Efficiency Ratios by Asset Tier," that "credit unions are consistently more efficient than banks of the same asset tier." In its comparison of efficiency ratios from 2004, 2206, 2008 and 2010, it noted "a noticeable disparity between relative efficiency" of the two groups.

Celent obtained bank efficiency ratios from Federal Deposit Insurance Corp. reports and calculated credit union efficiency ratios based upon the FDIC formula: noninterest expense less the amortization expense of intangible assets, as a percentage of the sum of net interest income and noninterest income, said Celent.

The minimum viable size for a bank is between $100 million and $300 million in assets, while the limit is roughly half that for credit unions, said Celent. "Reasons for this disparity can be seen in the way each type of institutions handles product lines, customer centricity, commercial banking, resource sharing, and technological investment," said the report's abstract.

"Celent sees no reason why this disparity in relative efficiency will not continue into the future," it added.

"Credit unions don't participate in commercial lending, which is an 'inefficient' part of banking. They also have shared service centers, which enable more scale and greater efficiency," said Bart Narter, senior vice president of Celent's Banking Group and author of the report. 

To read the report, click here.

 

How to Break Up With Your Bank in Seven Steps

Do extra fees and surcharges have you feeling unloved by your bank? Money magazine's Amanda Gengler explains how you can end a taxing relationship with your bank and move on to a happier fiscal future.

The smart way to change
Start by deciding what you don’t like about your current financial institution and what you want from a new one. This will help focus your search.

For instance, some people need ready access to the ATMs. Others don't.

Then follow this seven-step checklist put together by Consumer Reports:

  • Step 1: Open your new account with a small deposit.
  • Step 2: Make a list of all the automatic payments and deposits that are scheduled to go in and out of your old account each month.
  • Step 3: If you have direct deposit, ask your employer to reroute your paychecks to your new account. Find out what date the first deposit will occur.
  • Step 4: Once you know the date, reschedule each automatic payment or debit to come out of your new account. Make sure to ask what date the change will apply.
  • Step 5: Leave a small amount of cash in your old checking account for at least one more month.
  • Step 6: Once you’re sure all automatic payments and all direct deposits are coming and going from your new account, electronically transfer the final funds from your old account into the new account.
  • Step 7: After the transfer clears in your new account, follow the procedures for closing an account at your old financial institution. Make sure to obtain written confirmation that your account is closed.

Click here to read the article or watch the video.

 

DuTrac Community Credit Union Thanks Members, Supports Local Honor Flight

DuTrac Community Credit Union partnered with Rainbo Oil Company, owners of Kwik Stop convenient stores, to sell Dairy Queen treats at the Credit Union's Dubuque Member Appreciation Days with all proceeds benefiting Dubuque's Honor Flight. Through these types of community events, more than $51,000 was raised to support the Honor Flight.  

DuTrac Community Credit Union served nearly 5,000 hot dogs and brats to members in the Dubuque area community during DuTrac’s summer-long annual Member Appreciation Days to help to support Rainbo Oil Company’s effort.

“Once again, our members truly embraced the credit union philosophy of 'People Helping People' by donating to the Honor Flight program,” said Andy Hawkinson, DuTrac's President and CEO. “DuTrac thanks its members for their support through the annual Appreciation Days. In turn, DuTrac's members and staff showed their support for the service and sacrifice of our veterans.”

Jill Reimer, vice president of Rainbo Oil Company, was thrilled with the contribution from DuTrac and its members. “The generosity of this community overwhelms me. What a great place to live and do business!”

The Honor Flight program is a non-profit organization helping American veterans travel to Washington D.C. - free of charge - to visit the memorials dedicated to their service and sacrifices. For more information, visit honorflight.org

Treasury to End Sale of Paper Savings Bonds

The 2011 holiday season marks the last chance to purchase paper savings bonds from financial institutions.

On December 31, 2011, the U.S. Department of the Treasury will end over-the-counter sales of paper savings bonds at financial institutions. This action is a continuation of the Treasury’s all-electronic initiative which is expected to save American taxpayers approximately $70 million over the next five years.

Although paper bonds are being discontinued, Series EE and Series I Savings Bonds will remain available for purchase through TreasuryDirect®. This secure, web-based system, operated by the Bureau of Public Debt, has been used by investors since 2002 to purchase savings bonds online. For a list of frequently asked questions, visit the TreasuryDirect® website.

Paper savings bonds can still be redeemed at all DuTrac Community Credit Union office locations.

 

Wall Street Journal: Credit Unions More Affordable Than Banks

 "Credit Unions: a Cheaper Banking Option" - An article in The Wall Street Journal touted credit unions as a more affordable option than banks.

With banks doing away with free checking and tacking on more fees, you may be able to get more bang for your buck with a credit union.

Credit unions typically offer better deals on checking accounts, loans and other products compared with banks. And it's a lot easier these days to join one of the more than 7,000 credit unions out there.

Credit unions are able to beat banks across the board because they're nonprofit and owned by members, so they have an incentive to offer the best deals possible, says Greg McBride, senior financial analyst at Bankrate.com.

Free checking is a thing of the past at many banks. But about three out of four credit unions still offer accounts with no monthly service fees. Also, out-of-network ATM fees and overdraft fees are lower at credit unions on average. Credit unions charge members an average 99 cents for using an out-of-network ATM, compared with an average $1.41 for banks, according to Bankrate.com.

Interest rates on saving accounts and certificates of deposit are pretty paltry everywhere, but you're still likely to get a better rate with a credit union. For instance, a one-year CD paid 0.7% on average at a credit union in mid-August, compared with 0.42% on average at banks, according to Bankrate.com.

And rates are typically lower on what you want them to be: credit cards and loans. For new-car loans, rates were an average 4.67% at credit unions in mid-August while banks charged an average 5.47%, says Bankrate.com.

A home-equity line of credit at credit unions had a 4.16% interest rate on average in mid-August, compared with 5.38% at banks, says Bankrate.com.

Based on those rates, if you borrowed $30,000 against your home equity, you'd pay $1,248 in interest annually at a credit union, compared with $1,614 at a bank -- a difference of $366.

Most people are eligible to join some sort of credit union, says Patrick Keefe, vice president of communications at the Credit Union National Association, a Washington, D.C.-based trade group. You can join a credit union affiliated with your employer or participate in one open to employees of multiple companies. You also may be eligible to join one affiliated with a company you do business with.

Other options: community credit unions, which are usually open to people who live, work, attend school or worship in a specific geographic area. The Midland Credit Union, for example, is open to anyone who lives or works in one of eight central Iowa counties.

Also look for a credit union affiliated with your college, religious group or branch of the military. Often, your immediate family can join as well.

You can search for local credit unions and find out about eligibility requirements at asmarterchoice.org.

View the complete article

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