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Wisconsin CU League News Release - 10/28/09Study calls credit unions’ credit cards a “benchmark” for fairness to consumersCredit 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 www.creditunion.coop/ratedex.php
to compare credit union and bank rates and www.cudifference.org to find a
credit union you can join.
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©2005 Wisconsin Credit Union League. All rights reserved. |
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