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Pew credit study shows the CU difference Mica says
WASHINGTON (10/29/09)--A recently released Pew Charitable Trusts study on unfair or deceptive credit card practices “underscores that a consumer in need of a credit card would do well to look to credit unions,” Credit Union National Association President/CEO Dan Mica said. “This study is another example of an independent third party which has confirmed that credit unions, on their own and without prompting from regulators, provide their members with honest, fair deals,” Mica said. He added that “it is further evidence that all the new regulations coming down on financial services are unlikely to change the behavior of credit unions since they are already doing the right things.” However, Mica said, “credit unions are concerned that the costs of complying with these new regulations will affect the deals they are able to offer their members.” The Pew study, which gathered information on about 400 credit cards issued by the 12 largest banks and the 12 largest credit unions, found that credit cards offered by credit unions provide their members with more reasonable annual percentage rates, cash advance fees, late fees, and other fees. The report also found that penalty fees at the largest credit unions are nearly half those assessed by larger banks. The report also suggested that many of the terms of credit union credit cards could provide “useful benchmarks” as the Federal Reserve Board creates new “reasonable and proportional” penalty rules, as required by the CARD Act. According to the Pew report, 99.7% of bank cards allowed the issuer to raise interest rates on outstanding balances by changing the account agreement unilaterally. Additionally, 90% of bank cards had penalty interest rates that could be triggered by late payments or over-limit transactions, according to the study. Further, 95% of bank cards allowed issuers to apply payments to low interest balances first, hampering a cardholder's ability to pay down higher interest balances. The other 5% did not disclose the issuer's policy, Pew reported. Commenting on the Pew report, Wisconsin Credit Union League President/CEO Brett Thompson said the study confirms what many credit union members "already know--that by owning the financial institution where you borrow and save, you’re protected from unnecessary fees. “Because there are no shareholders expecting profits--just members leveraging their ownership of the cooperative for better deals on financial services--credit unions consistently earn high marks for fairness to consumers,” he added. The league has communicated the results of the Pew study to local media and has also shared information with credit union insiders for further distribution.


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