Credit Unions Remain a Safe Haven

With banks failing weekly, savers worry about the longevity of their financial institutions and the security of their savings, while borrowers scramble to find willing lenders offering affordable rates. 

Thankfully, more and more former bankers are finding safe haven in their local credit union. Credit unions seem like a no-brainer, boasting higher interest rates for savings and lower rates for loans than traditional banks. 

Credit union membership rose 5 million from 2004 to 2008. Credit union lending rose $36 billion from 2007 to 2008, coinciding with a decrease in bank lending of $31 billion in the same year. 

Not only do credit unions offer better rates, they blow the competition away with outstanding customer service, all without monetary assistance from the federal government. 

"The credit union industry has proven solid," said Karen Dorway of BauerFinancial, a firm that analyzes banks and credit unions. Loans from credit unions increased 7% last year, largely due to first time mortgages and auto loans. Delinquencies on these loans are less than half of the amount of bank loan delinquencies. 

Think Small and Local

Small financial insitutions and credit unions have been noticing deposit increases over the last three months. Americans are weary of big banks and many of their customers are turning to smaller, local financial institutions. 

While the other banks were failing, credit unions noticed an increase in small business customers and requests for housing loans. Credit unions are seeing growths of nearly 50% from last year. The smaller the financial institution, the more appealing it is to customers. Large banks can't compete with the deposit and loan rates that credit unions have to offer.