Credit Unions Harbor Big Bank Refugees
Big banks’ recent customer losses have been a boon for other financial institutions. Credit unions attracted a record number of new members in 2011, as more consumers decided to ditch big banks and their big fees in favor of more community-minded alternatives.
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Spurred by consumer movements like “Bank Transfer Day,” credit unions in the U.S. gained a net 1.3 million new customers last year, boosting membership to a record 91.8 million, according to data from the National Credit Union Administration.
Many customers at banking giants like Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citi (NYSE:C) and Chase (NYSE:JPM) were fed up with new and higher fees on their checking accounts and sought alternatives in community banks and credit unions, which often offer better rates and charge fewer fees.
In the fourth quarter, after Bank of America ditched plans to charge a fee for debit card use amidst consumer outcry, credit unions added 398,000 customers, about 30 percent of net members added in 2011. In the fourth quarter of 2010, before the big-bank exodus began, credit unions lost 251,000 members.
“In the last quarter of 2011, the credit union industry grew to record levels in total assets and members,” said NCUA Board Chairman Debbie Matz. “Combined with a year-over-year jump in industry net income of more than 40 percent, it appears that credit unions have turned a corner and begun to put the most severe economic crisis in three generations behind them.”
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