I often receive questions about how we set our rates and how our rates compare with other institutions. Almost always members want to know why deposit rates aren’t higher and loan rates lower. The Credit Union’s objective is to balance the needs of our saving and borrowing members in a fair and safe manner. You may be surprised to learn that savings and loan rates are very closely related.
For example, although we strive to offer deposit rates that are among the best in the market, with the current state of the economy, we have experienced substantially reduced loan demand over the past two years. Loan demand is what drives our income and allows us to pay above-market rates. Right now our rates are very competitive, but they are not market-leading.
I encourage you to educate yourself about your financial relationships and be informed with chasing high-rate deposits. Some institutions are overpaying for deposits because they are looking for liquidity (cash to operate their business). Typically, higher rewards translate to higher risks. Federal deposit insurance is a safety net for consumers and, as you know, some “bailed-out” bankers have used their insurance coverage to under play the risks confronting them.
While we strive to provide our members with market-leading value with the products and services we offer, it simply is not in the best interest of our members to match all pricing offers, especially when they would product a financial loss for all members.
We pride ourselves on staying on top of our competition and shopping the rates so you don’t have to.
Additionally, your Credit Union deposits are insured by the National Credit Union Administration (NCUA), a federal agency backed by the full faith and credit of the United States government. Not one penny of insured savings has ever been lost by a member of a federally-insured credit union.
Simply put, your deposits are safe and secure.
Stay tuned as we move through this “great recession.” By remaining safe in our practices and sound in our business decisions, we are well-positioned to provide superior value after market rates begin to rise.