Wednesday, December 23, 2009

Tell your friends the truth about credit unions

You don’t need to wait for some special holiday to give the gift I’m about to suggest. If you are a good friend, neighbor, relative, coworker or whatever you will give the gift of credit union membership. Okay, wait don’t leave, let me tell you the real reason you should do this, and it’s not just warm and fuzzy.

First, I can’t understand why anyone decides to open an account at a bank. I’ve done it and can only think of one time when that was a good idea. I was just out of college and switched from one bank to another. That bank helped me save, so it worked out well. No other bank ever did this for me, but I’m sure that bank is out of business now. So, why use a traditional bank? Maybe, it’s the location thing. Or maybe it’s all the advertising. I sort of understand that, these things give the impression of stability and strength—that’s exactly what they want you to think. But after this year we know it’s not true.

Yes, it was a bad year to be a banker. But wasn’t it bad banker behavior that brought on the mess? Yes, it was. Bankers making bad loans were the instigators in the fall of our economy. So then what happened? Oh you know. The banks took taxpayer funds to save themselves. And, then what? Remember, then a bunch of banks failed, closed their doors. The good news? Some banks are actually paying back the money they used to get their act together. But now they won’t lend money at all. Well that’s not really true, but they are being rather tight with it. Hey, didn’t we give them money when they needed it?

Okay, so that’s the summary of what happened to banks, but what was going on with credit unions during this. Did credit unions take bailouts and close? Well, some did, sort of, but not really. It’s true that some credit unions did close or merge. It was the corporate credit unions who took some bailout money. These are the institutions that handle the investments for credit unions. And of course, because the economy’s investments were struggling, so were these institutions. But, for the most part credit unions were operating with business as usual. They were still lending money, they weren’t cutting credit lines like home equity lines, and they weren’t hiking credit card fees. They were also still issuing mortgages, respectable mortgages.

During the economic crisis to date 30 credit unions and 140 banks failed. That leaves 11,000 credit unions and 8,099 banks open. So, you see credit unions have remained stable even during this unstable time. Well, back to my point…

Times are still tough for many people. So don’t let your friends stay with a bank that’s going to make it tougher as they dream up new fees and tighten lending. The idea of switching financial institutions is painful. It requires that you actually do something and take time out of your busy schedule to get that something done. But, that’s the idea of switching. The reality of switching isn’t that bad and the gain of the switch is great. Once I joined a credit union, I’ve never looked back. It was the best financial move I’ve made.

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