Credit unions move into
modern age -- with human touch
By Pat Curry • Bankrate.com

Banks get more and more massive, and bank charges keep climbing. But now an institution once thought of as the runt of the financial litter is giving banks a run for your money.

Across the country, bank charges keep rising, as Bankrate.com's latest semiannual bank fee study shows. At the same time, bank mergers continue to lead us into the megabank era.

But a large segment of consumers have access to rapidly improving financial services at the country's 11,000 credit unions.

Consistently charging lower fees than banks and offering better interest rates on loans, credit unions have now also begun offering such market-driven products as online banking, toll-free call-in loan approval and shared branching to give members nationwide, around-the-clock attention.

Keeping 'community' in financial services
With the Financial Services Modernization Act before Congress, opponents of the legislation have argued that its passage will lead to more mergers that gobble up small, local banks, drive up fees and force low-income consumers to check-cashing stores and pawn shops for their banking needs.

Even if the legislation stalls, big banking mergers are already common practice.

Callahan and Associates, a Washington, D.C.-based research and consulting firm that focuses on the credit union industry, points out that merger mania has produced an unexpected phenomenon in several urban areas.

"As large banks come into town, merging away the local community banks, credit unions are the largest locally owned financial institution," said Ray Springsteen, Callahan's director of business development. "In San Antonio, Washington, D.C., and the Miami area, they are THE locally owned institution. You find there's some credit unions in Minnesota where bank mergers resulted in them picking up more members."

Big banks tout access
The American Bankers Association acknowledges that in some states credit unions are now the largest financial organizations. But spokeswoman Charlotte Birch says the association has no statistics suggesting that credit unions are the big players in any urban areas.

"If you're a little bank and see this relative giant competing with a tax advantage, you have reason to be concerned," she says.

Birch says that where banks typically shine is in their extensive branch and ATM networks.

"That's where they really offer an advantage over credit unions, just in terms of convenience," she says. "(Credit union members) typically don't have as many ways to access their money any time of day."

New choices
But even that is changing.

Today's credit unions are offering choices like never before. "The services being offered at credit unions run the gamut from mom-and-pop savings and loans to very progressive credit unions offering online banking, money markets, market index certificates, you name it," says David Klavitter, a spokesman for the Credit Union National Association.

Credit unions have embraced the Internet in a big way, Springsteen says. Since the first credit union Web site went live in 1995, about 20 percent of credit unions have gone online.

Members without Internet access may also now be able to connect with their credit unions 24 hours a day through outsourced call centers. That means a member who is shopping for a car after work can get a loan approved before heading to the dealership the next morning, knowing how much he has to spend.

If you've rejected the notion of joining a credit union because there's only one location for transactions, it's now worth looking into again. Shared branching, which allows members of several credit unions to handle transactions at each other's locations, is booming.

Bill Steele, vice president of real estate at WesCom Credit Union in Pasadena, Calif., touts the benefits of shared branching. "We can't afford to put a branch on every corner," he says. "This allows you to share resources. A member of another credit union can walk in and do a transaction."

But for all the benefits of technology, Steele noted that the major benefit of credit unions is their ability to look beyond credit scores to the people behind them.

"I know there have been times when credit unions were very liberal on deferring payments -- when industries went out on strike or when there's a disaster," he says. "That's very common in this industry. We're a little more friendly in that regard."

More affordable and safer than check-cashing stores and pawn shops, credit unions are now offering more services, making them an attractive alternative to megabanks.

Can you join a credit union?
Bankrate.com has a current list of credit union rates and compares them to banks and thrifts. Still, many people may not even know they're eligible to join credit unions, which are sponsored by employers, associations (such as religious or fraternal organizations), communities or low-income community development organizations.

Nationally, more than 60 percent of all workers have access. Consumers can check with their employers or their spouse's employer to see if they offer credit unions. Adult children can join their parents' credit unions, and vice versa.

If you don't know if your community has a credit union, the CUNA Web site has a credit union locator.

Pat Curry is a freelance writer based in Georgia

-- Posted: Oct. 20, 1999