Numbers don't lie, and the statistics suggest that credit unions are growing within the United States. Membership at credit unions increased by 0.9 percent in the first quarter of 2015, according to the Credit Union National Association. During the 12 months from April 2014 to March 2015, membership rose 2.9 percent, well above the national population growth, which saw a 0.7 percent increase.
For credit union executives, this is wonderful news. The more members a credit union has, the more money at its disposal to hire employees, hand out loans and help members make investments. However, executives should know that while more Americans than ever before are choosing to join credit unions, these same people are changing how they invest their money.
Credit card debt dropping
One of the biggest changes in thinking among American consumers concerns debt. Paying off debt is an issue the affects many people. The average American owes more than $7,000 in credit card debt, according to financial blog NerdWallet. If citizens with no debt are eliminated from the equation, then the average person has an outstanding credit card balance of more than twice that, a total of $15,706.
Credit card debt is among the biggest areas where Americans are adjusting their way of thinking. In 2014, credit card debt accounted for 6.52 percent of the nation's overall household debt, according to a recent Nilson survey. That is the lowest percentage of overall consumer credit since 1990.
The inverse of that is that loan quality for credit unions improved, as delinquencies fell from 0.85 percent at the end of 2014 to 0.69 percent at the end of 2015's first quarter, according to CUNA statistics. More people are paying their credit card bill every month to avoid falling further into debt.
Net chargeoffs, which represent the value of loans and leases removed from the books and charged against loss reserves, also dropped, according to the CUNA. The amount of accounts listed as chargeoff was 0.53 percent in the fourth quarter of 2014, compared to 0.47 percent in the first quarter of 2015. The lower the percentages, the more a credit union collected than it handed out.
Both the delinquency ratio and the net chargeoff rate are at their lowest readings since 2006 and both are very close to all-time lows, the CUNA stated in its first quarter report.
For credit union executives, these are exciting times. More and more Americans are seeing the value in using credit unions as their financial institutions of choice. However, executives must be aware of the changes in debt payment strategies among Americans in order to make the most of their membership.