If you’ve chosen to do your banking at a credit union, you might have done so for the small, local feel of it, the service you get or the sense of being more than just a number.
But then comes word that your credit union is merging with another — conjuring the image of big companies that just want to get bigger. You might be concerned, understandably.
Don’t fear. Credit union mergers are nothing to lose sleep over. In fact, you might find the change works out in your favor.
New Name, Same Mission
At their core, credit unions are nonprofit financial institutions that let members deposit their money and take out loans. Instead of pocketing any profits, credit unions return them to members in the form of higher dividends. If your credit union is merging with another credit union, the two like-minded institutions should retain that philosophy.
A merger won’t result in massive changes to the way you bank, and therefore shouldn’t encourage you to jump ship. You should still expect your credit union to eliminate monthly service fees whenever possible and offer interest rates that are, on average, better than those seen at banks. Although you’ll have to get used to a new name — and a new website — credit union mergers are often a good thing.
From 2003 to 2012, mergers contributed to a 27 percent decline in the number of credit unions in the U.S., from roughly 9,369 to about 6,812, according to the National Credit Union Administration. And yet, for eight years running, credit unions have outpaced banks in findings by the American Customer Satisfaction Index, which measures a range of factors including competitiveness of interest rates, transaction speed, friendliness of staff and customer loyalty. In all those areas, credit unions continue to rate higher than banks.
Improved Services
In most mergers, a larger credit union will absorb one with fewer assets, and often the smaller party is in a weakened state. Although the exact reasons differ from case to case, many other mergers are done primarily to give existing members access to better rates and services.
For example, a credit union may be better able to meet the growing technological demands of its membership by linking up with another credit union that has more fully developed online and mobile banking platforms. Members might also have access to a wider variety of accounts and loans, including ones that weren’t available at their old credit union, such as teen checking accounts, money market accounts and auto loans with a greater variety of term lengths. In instances when a credit union gets healthier financially because of a merger, it might mean better rates for members.
More Branches and ATMs
A credit union merger can also make it easier to bank in person and find surcharge-free ATMs. Once a merging credit union has a joined another institution, members are able to use that new credit union’s ATMs, granting access to dozens, hundreds or even thousands of additional cash machines, especially if their new credit union belongs to one or more of the large ATM networks, such as Allpoint, MoneyPass or CO-OP.
What does that mean for members? Fewer fees, for one thing. Using an out-of-network cash machine can cost as much as $3 per transaction. And then there’s the convenience factor: You’ll still be able to visit all your local branches, along with those of the acquiring credit union.
The Takeaway
As a credit union member, you may have the opportunity to vote on any proposed merger; federal credit unions are required to present their proposal to members for approval. Learn as much as you can about your credit union’s merger, and then voice any concerns you may have. In most cases, though, there will be more to look forward to than there will be to worry about.
Your basic banking experience probably won’t be upended by a merger. You’ll still be able to use your current debit and credit cards, or new ones will be issued to you. As long as your new credit union is federally insured, up to $250,000 of the funds in your accounts will continue to be protected by the National Credit Union Administration. And you might see new services or features as a result of your credit union getting a little bigger.
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What a Credit Union Merger Means for Members originally appeared on usnews.com
