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The Rise of Credit Unions

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Here at TotalBankruptcy.com, one of our goals is to inform individuals about their financial options.

Given the recent financial turmoil in this country, many people are turning to alternative ways of managing their finances. Traditional banks have taken on a bit of ridicule due to high overdraft and ATM fees, among other issues. Meanwhile, another form of financial institution is on its way up the totem pole and has seen some promising returns on their investments - credit unions.

credit unions rising

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What's the Difference?

Banks

  • Banks are for-profit corporations owned by private investors and governed by a board of directors, who are chosen by stockholders.

Credit Unions

  • Owned by their members, credit unions are non-profit financial institutions whose board members are elected by their customers.
  • They treat deposits as though they were investments and are expressed as shares.
  • All of a credit unions profits are distributed as dividends to its members.

Savings Institutions

  • These businesses specialize in real estate financing and they could be a mutual or corporation.
  • They're easily distinguishable by their designation of either SSB or FSB to indicate whether or not they're at a state or federal level.
  • Savings institutions elect a board of directors similar to banks.

 

Constantly Growing

  • As of 2011, there were 7,351 credit unions in the United States.

Steady Growth in Membership (in millions).

2007
 88.5
2008 89.9
2009
 91.1
2010
 91.7
2011
 93.9

 

Loans to Asset Growth Rate

 Assets
Loans
2008
 7.2%  6.7%
2010
 3.3% -1.2%
Mar 20012
 11.5%  1.3%

 

  • If you combined all the credit union assets from around North America it would equal 1 trillion dollars.

Reason for Sudden Growth

  • Between the Occupy Movement and Bank Transfer Day, 5.6 million people switched financial institutions in the 90 days preceding January, 2012.
  • While big banks own more than 18,000 ATMs, credit unions tend to use more widely accessible company ATMs.
  • Allpoint: 43,000 surcharge-free ATMs.
  • Co-op Network: 28,000 ATMs in the U.S. and Canada.
  • Money Pass: Tens of thousands of ATMs around the U.S.
  • 54% of credit unions in the U.S. experienced a boost following Bank of America's announcement to charge a debit card fee.
  • There was a 2.5% membership growth for credit unions in 2012 - the highest it has been in the last 5 years.

Conclusion

Credit unions have gained a good deal of traction in previous months, and as they grow, traditional banks may find their customers switching. Though the number of credit unions has declined, their ability to capture countless new customers has not diminished.

For more information about banks and finances, check out our financial literacy section. You'll find easy-to-use articles about managing your money.

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