Credit Unions May Only Be Different in Degree & Wal-Mart Muscles In

   111102-Bank_Transfer_Day-AP11110216040_620x350         New Orleans               Having written about the need to sever our bad codependency relationship with big banks that are daily picking our pockets, I hopefully popped up the street to the new offices of my local credit union, ASI.  I had good reason to do so.  Their sister organization is my landlord and ASI originally stood for Avondale Shipyard Industries, so was rooted in an important local industry and at least temporarily a big unionized outfit in New Orleans until they shutdown.

            Unfortunately even as I signed up for a new account, the bloom was falling off the rose. 

            My friends at the credit union tried to sign me up for overdraft protection, even as I opened the account, which is pretty widely viewed as a sketchy, overpriced financial product.  The overdraft fees pushed $30, just like the big banks, which is also a no-no.  Worse the maintenance fees for a checking account were all pretty much more expensive than other big area and national banks at $10 per month under $300 or so and $8 under $500.  To escape monthly fees we credit union backers would have to maintain a $500 minimum balance.  The ATM’s were cheaper and there was no plan to fleece consumers there, but access was not easy and the hours were less than 24/7, which many folks want these days.  My sales pitch when I returned to the office was falling flatter than any pancakes.

I wasn’t quite able to hold my tongue when they explained that they might hold a check for up to 11 days, which was ridiculous, and seemed to be courting more payment of those overdraft fees.  My hopes that they might be able to handle some our organizational accounts were dashed right there on that item alone.  Wire transfers also looked prohibitive. 

At least credit unions always had the reputation for doing better on savings, but there the offer currently was .0025% (one-quarter of one percent).   It certainly was easy to open an account for almost nothing down, which put them at a huge advantage over other financial institutions, though I left scratching my head as I read the fee chart about how long those accounts could last with $10 per month monthly maintenance charges. 

To create more community and citizen wealth we need more competitiveness and sustainability.  I couldn’t even see evidence of “lifeline” accounts which might be all on-line and all-ATM based, thereby limiting costs for the institution and still allowing the consumer to be banked rather than unbanked.

All of this made it painful for me to read the article in the Times trumpeting how our buddies at Wal-Mart are benefiting from the financial crisis and the progressive push against banks.  Working families are increasingly using their cheaper check cashing and card loading products as faux-banks rather than maintaining accounts. 

To successfully build alternative and effective financial capacity for low-and-moderate income families, we need institutions that are committed to being different, embracing the cooperative and community vision, and are willing and able to embrace the needs of the community and respond to them.  Hopefully, the movement into credit unions will force them to rethink how they assess their role as competitors for these customers in the market, rather than simply being “big-bank-lite” and only different by a matter of small degrees rather than huge distinctions.

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