Credit Unions Growing in Popularity

Credit Union text - IRAs, Checking, Mortgage, COD, SavingCredit Unions across the United States are growing in popularity as Americans move away from traditional banking institutions. Credit unions are community banks and lenders that provide financial services to local communities. Many Americans like the terms being offered by credit unions because they are often times more competitive than what is offered by traditional banks, while also feeling like they are more engaged with their community.

Credit Union Growth

For example, lending at credit unions in Wisconsin grew by 9.6 percent over the last year. Wisconsin’s Department of Financial Institutions said the state’s 150 state approved credit unions provided $22.2 billion of loans over the year, an increase of $2.2 billion. The number of loans ending in default also decreased slightly over the period. It’s likely that credit union loans default at a lesser rate because credit unions generally focus on profit less than traditional banks, leading to better terms for borrowers.

Helping Consumers

An example of an increasingly popular credit union is the Red River Mill Federal Credit Union in Louisiana. The credit union recently announced that up to 60 percent of the loans they have provided are for the refinancing of high-interest and predatory loans. Over the past few years, legislatures across the nation have been attempting to pass new laws protecting both consumers and businesses from loans with deceptive terms and enormous interest rates. Red River Mill Federal Credit Union is attempting to give back to its community by helping local people refinance their predatory loans.

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Boosting Local Business

Another example of a noble credit union can be seen north of the boarder in Canada. Although it is not an American credit union, it functions in a very similar way. Northern Credit Union in Ontario is offering local small businesses preferential loans of up to $250,000. The loans will be unsecured and much more accessible to local small businesses than normal loans. Northern Credit Union is also providing the loans through an entirely online service. Not only will local businesses be able to apply online, they can track and pay back their loan online as well.

Technological Advancements

Another reason credit unions are becoming more popular is because they are offering more and more services that appeal to consumers. Recently a consortium of 120 credit unions added MasterCard’s payment network to its existing payment structure. The consortium created a mobile online payment platform known as CU Wallet. The platform is entirely focused on both community grown ethics in lending and borrowing and using new technologies to provide cheaper and better financial services. CU Wallet has recently been approved to offer MasterCard’s MasterPass digital wallet service to its clients.

Appealing to Borrowers and Communities

Credit unions may appear similar to traditional banks and other lenders, but in reality they are a much different breed of financial institution. Credit unions do make less than traditional banks, but that’s only because they offer lower interest rate loans to members of their community. Additionally, credit unions focus specifically on growing their own communities, rather than sending profits back to some headquarters half-way across the nation. Many people in North America recognize the benefit of using a local credit union and are flocking to these local institutions to see what they have to offer.

Posted on March 18, 2016 by in Personal Finance

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