Community First Credit Union in Appleton figures it has saved members $17 million so far this year. That’s the difference between what members were paying in interest for mortgages, credit cards and car loans to outside financial firms compared to the rates their local credit union offered, added up for the duration of the loans.
“When we refinance a loan and bring it to Community First, we calculate the difference,” Amanda Secor, senior vice president of marketing, explains. The sums come from the total savings over the lifetime of the loans. The goal is $100 million in savings over three years.
The last couple of years haven’t been easy for credit unions as they worked through the economic downturn. But now, credit union membership is bouncing back.
“Another 13,300 people became credit union members in the first quarter,” says Kim Santos, director of the state’s Office of Credit Unions. “Total membership for all Wisconsin credit unions is closing in on 2.3 million people.”
Positive signs for credit unions statewide
The Wisconsin Department of Financial Institutions (DFI) says that the state’s credit unions grew income by 7.6 percent in the first quarter of 2013 compared to 2012, while total assets grew to $24.1 billion, an increase of 3.3 percent over year-end 2012.
“First-quarter credit union performance continued the very positive trend of 2012,” DFI Secretary Peter Bildsten says. “Assets and net income are up. Loan quality continues to improve. Net worth remains strong at over 10 percent. These indicators are positive signs for the credit union industry and the Wisconsin economy.”
One of the ways credit unions are keeping members interested is by implementing plans and programs to help them save as much money as they can.
“We see members who may be paying 5 to 8 percent, some in the teens on car loans. A lot of people, even though the rates are low, haven’t refinanced their home,” says Secor of Community First. “Going down 1 to 3 percent on your home loan can make a huge difference in your monthly payments. Our members can save 2 to 3 percent on a mortgage; it can make a real difference.”
Refinancing a car loan is very simple, she adds. Members apply and once they are approved, the old loan is paid off and the new one, at a lower rate, is opened with the credit union.
“For one member it might be an auto loan. Or another member comes in with an auto loan and we take a look and realize we can save them money on their mortgage.” Just because existing payments fall within a member’s budget doesn’t mean the rates can’t be improved, Secor adds. Members might be paying 24 percent on credit cards that the credit union can offer at 8.9 percent.
“How much does that save you? It lets you pay down your principal faster,” Secor says. Advisers at the credit union can show members how to direct their savings into an account for a down payment, or a cushion account or a vacation savings account once they reduce their interest rates.
Mike Mehlberg, lending and collections supervisor for Capital Credit Union in Neenah and Oshkosh, says that while his credit union doesn’t offer a program of financial advice, he likes to meet with members and go over their entire financial portoflio to see what Capital can do to make their lives easier. Everyone is treated as unique, he adds.
“We see what kind of loan program we can tailor. Some members just need a month away (from payments) while some might need debt consolidating or restructuring. We will see where they are hurting the worst. The process may be gradual, we tell them to get this under control and then look at doing that. You have to start out little and get bigger and bigger to get something that will work for them.”
Sometimes, he adds, the hardest thing is finding common ground between what the member can do and what the credit union can accept.
“If the debts are all with the credit union, we can usually put them into one loan because our exposure is already there,” Mehlberg says.
Capital refers people to FISC, a licensed credit counseling organization, as do the other credit unions, because the nonprofit offers financial advice and will help people consolidate their debts.
“We know our community,” adds Mehlberg, “and we want our community to do well. We have a vested interest more than a big box bank.”
New concept: financial advice by stages in life
Fox Valley Credit Union offers Balance, a financial counseling program it subscribes to for members. For online users it provides information on financial literacy, credit, lending and other topics. It also provides unlimited phone support.
“It’s not cheap, but it’s free to our members,” says Lynn Hopfensperger, community development officer at the credit union.
Prospera Credit Union in Appleton has recently launched the LIFEstage Personal Guidance program, which offers eight life stages from starting a career or for new couples to empty nesters, retirees and divorced or widowed. New parents are reminded they need wills. The credit union staff developed the program with more than a year of work.
Sheila Schinke, Prospera’s CEO, says the widowed and divorced tracks strike a chord with members because those are situations members haven’t planned for.
“When they come in here, they are pretty shaken up. We give them a checklist and say, ‘Here are some things you might not have thought of.’” The credit union has been constantly training its staff in the program and evaluating feedback, which has led it to add singles and couples with no children to the program’s categories.
“Our existing members say this is what you have been doing for us all along, while new members are surprised at what we can do for them.”
“Just because you’re a certain age doesn’t mean you have the same financial needs and priorities as others your age,” Schinke adds. “That’s why Prospera focuses on stages instead of age. Each life circumstance involves different emotions and decisions and then provides customized financial guidance that reflects that understanding.”