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INewsdayI In turbulent times more turn to CUs
MADISON, Wis. (5/17/10)--More U.S. consumers are turning to credit unions amid a troubled economy that’s creating mounting frustration with banks, Newsday.com said Thursday. Credit union lending was up for several types of loans, while bank lending was down at the end of 2009, the Credit Union National Association (CUNA) told Newsday. “And for the first time in recent years, credit union deposits grew at a faster pace than bank deposits,” the publication said. “The difference was stark, too: Credit union deposits were up 10.3% last year, but bank deposits rose only 2.1%.” “We’ve seen a huge influx in savings in the last 18 months,” Pat Keefe, CUNA vice president of communications and media outreach, told Newsday. Where is the money coming from? “It’s coming from banks,” Robert Allen, president/CEO of Farmingville, N.Y.-based Teachers FCU, one of the largest U.S. credit unions, told Newsday. Troubled banks need to re-establish their financial stability by cutting their lending and downsizing their deposits. So when customers turned away by those institutions search for a new place to conduct financial business, credit unions become more attractive, Allen added. Meanwhile, Municipal CU in Manhattan has experienced balance transfers on the credit union’s Visa cards. They’ve tripled to $600,000 in March from $200,000 in January, which indicates consumers are departing banks, Geraldine Light, a vice president at Municipal CU, told Newsday. Kam Wong, Municipal president/CEO, noted that those transfers are a reaction to how banks often raise interest rates when consumers have late payments or exceed their credit limit. Credit unions generally don’t implement that type of “penalty pricing,” he told Newsday.
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