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Wisconsin Credit Union League: Study calls credit unions’ credit cards a “benchmark” for fairness to consumers
10/28/2009

CONTACT: Christine Henzig
chenzig@theleague.coop
(800) 242-0833, Ext. 6019

Credit unions charge less and “play fair,” unlike largest banks that control 90% of the nation’s plastic debt

Pewaukee, Wis. - Until provisions of federal credit card reforms fully take effect next year, consumers may want to heed a new study that called credit unions’ credit cards a “benchmark” for fairness to consumers.

A study by Pew Charitable Trusts that examined 400 credit cards revealed that cards issued by not-for-profit credit unions already adhered to consumer-friendly practices to such an extent that the Federal Reserve might deem them “useful benchmarks” in creating more “reasonable and proportional” penalty rules under the Credit CARD Act. The Act, signed into law last May, aims to limit unfair or deceptive practices to credit card holders.

And although the credit union cards that were studied represented just 1% of overall credit card lending, their prices were deemed lower and their penalties less frequent and severe than cards issued by the nation’s 12 largest banks. All of the cards issued by the 12 largest banks – which control over 90% of outstanding credit card debt nationwide – were deemed so “unfair or deceptive” that none of them would pass muster under the CARD Act.

“This is yet another independent study confirming what Wisconsin’s 2.2 million credit union members already know – that by owning the financial institution where you borrow and save, you’re protected from unnecessary fees,” says Brett Thompson, President & CEO of the Wisconsin Credit Union League. “Because there are no shareholders expecting profits – just members leveraging their ownership of the cooperative for better deals on financial services – credit unions consistently earn high marks for fairness to consumers.”

Thompson says the Pew study falls on the heels of a July report by two Harvard doctoral candidates that concluded that credit unions’ credit cards charge lower rates than banks, are less likely than banks to charge fees and penalties, do not typically increase the interest rate for late payments, charge half the amount other issuers charge for exceeding credit limits and offer lower annual fees and longer grace periods than other cards.

Credit unions’ member-favored pricing and policies typify their REAL Solutions® initiative, which meets the needs of members and communities without regard for profit and teaches consumers to save, avoid financial predators, access low-cost loans, improve creditworthiness and build wealth. The effort, whose successes are detailed in Wisconsin credit unions’ 2008 annual report, has earned Wisconsin credit unions three Governor’s Financial Literacy awards over the past four years.

Visit http://www.creditunion.coop/ratedex.php to compare credit union and bank rates and http://www.cudifference.org to find a credit union you can join.

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ABOUT THE WISCONSIN CREDIT UNION LEAGUE

The Wisconsin Credit Union League is the state trade association for Wisconsin's not-for-profit credit unions. For more information, visit http://www.theleague.coop.

ABOUT CREDIT UNIONS

Credit unions are cooperative financial institutions that are owned by their members and do not have stockholders. Because they are not-for-profit, they return earnings to members in the form of more competitive rates of return on accounts, lower interest on loans, lower fees and improved services. Around 2.2 million Wisconsin residents belong to credit unions, of which nearly half are open to the local community. People can find a credit union to join by looking in the phone book or by visiting http://www.theleague.coop/findacu.


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