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Wisconsin CU League News Release - 10/28/09

Study calls credit unions’ credit cards a “benchmark” for fairness to consumers

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

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Chris Henzig
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(262)549-0200, Ext. 6019


Chad Helminak
Web Producer and Media Relations Manager
(262) 549-0200, Ext. 6012


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.
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