Despite challenging economic times in recent years, several area credit unions report steady membership growth. They attribute the trend to low interest rates on loans, rebates, customer focus, innovative products and services, greater consumer awareness and dissatisfaction with increasing bank fees.
“We watch what the competition is doing,” says Kara Helwig, vice president of marketing at Winnebago Community Credit Union. “Right now we’re offering a three-year home equity line of credit locked in at 1.99 percent, which is the lowest I’ve ever seen.”
Last quarter Winnebago Community Credit Union was named No. 1 out of 850 credit unions in the nation with assets in the $50 million to $100 million range by Callahan & Associates. “It’s based on return to member, which means our members are getting the most value for their money among credit unions our size. We’re very competitive and offer free checking in addition to low loan rates,” Helwig says.
Rebates also work well to attract new consumer members. Lakeview Credit Union focuses on its “Value in Participation” (VIP) program, where members’ accounts are automatically assessed and scored on a monthly basis and members earn points for the amount of business they do, including actions such as direct deposit and debit card use, says vice president Lisa Hintz.
In 2011, the VIP program returned nearly $240,000 to Lakeview’s 8,300 members throughout Winnebago, Outagamie, Calumet and Waupaca counties who participate in the program.
The VIP program illustrates the primary difference between banks and credit unions – ownership. Banks are typically owned by shareholders and credit unions are locally owned and run democratically by their members. And where banks pay dividends to shareholders based on earnings, credit unions return earnings to members in the form of lower interest rates on loans and fees for service. Banks also tend to cater to businesses, while credit unions focus on consumers.
Community First Credit Union has focused efforts on offering low interest financing for their members, says Amanda Secor.
“People are looking for ways to save money,” says Amanda Secor, senior vice president of marketing and public relations. “They’ve been hit with layoffs, frozen wages, increased expenses, decreasing home values and other tough situations. We focus on helping them save as much money as they possibly can. In 2011, we saved $18 million in interest just by refinancing loans they had with other financial institutions. In 2012, our goal is $20 million and so far we’re over $14 million,” she explained.
But consumers aren’t the only ones who stand to benefit from credit union membership. Prospera Credit Union offers its business members the option to create Health Savings Accounts for employees. “We view HSAs as a great option for businesses to save money,” says CEO Sheila Schinke. “Offering the depository HSA is a great way for us to partner with businesses. They see the reduction in health insurance costs as a benefit. Contributions save both employer and employees because they are pre-tax which saves Social Security and Medicare (taxes), and the deposit interest rate is significantly higher than traditional savings.”
Winnebago Community, Lakeview, Community First and Prospera are four of Wisconsin’s 211 credit unions owned by 2.2 million members. According to the Credit Union National Association (CUNA) Economic and Statistics Department, they saved members $201,992,310 in 2011 on competitive rates on savings and loans, and fewer, lower fees.
For-profit financial institutions (banks) have faced increased scrutiny since Occupy Wall Street spawned consumer frustration with increasing bank fees, generous executive salaries and benefits packages at a time when other industries were scaling back. Credit unions capitalized on the heightened awareness with events like National Bank Transfer Day last November, which attracted 40,000 new members nationwide in one day.
The membership growth trend is consistent across the state. According to The Wisconsin Credit Union League (WCUL), membership growth in all of 2011 was 1.9 percent. This tops the growth from 2008, which was 1.8 percent, and 2010, which was 1.2 percent. The largest increase in recent years was 2009, at 2.3 percent.
“Historically this makes sense,” says Chris Henzig, director of communications for the WCUL. “People tend to flock to not-for-profit credit unions during the most challenging economic times to access the kind of help that for-profit financial institutions don’t offer.”