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By Pam Leibfried
Part 2. Yesterday, in Part 1 of our series of articles in honor of International Credit Union Day, my colleague Paul Brucker wrote about the key differences between banks and credit unions. Today, learn how the credit union roots of cooperation and mutual benefit are reflected at Alliant – all in service of our members.
Credit unions like Alliant are categorized as “financial cooperatives,” which means that credit unions are co-owned by their members and operate for the mutual benefit of those member owners. The Credit Union National Association (CUNA), one of the sponsors of International Credit Union Day, describes the principles of credit unions as “founded in the philosophy of cooperation” and having the mutual benefit of all members as one of its “central values.”
Credit unions were started in the 1850s in Germany, during hard times there. Neighbors and family members banded together to help one another achieve financial goals. Those who had savings pooled their funds and loaned them to those who needed money.
This pooling of money and subsequent sharing with neighbors certainly exemplifies cooperation, and both the lenders and the borrowers experienced benefits from it. The savers/lenders earned a return on their money, and the borrowers gained access to the funds they needed.
A credit union today is obviously a more formally organized and regulated entity than those loose bands of farmers and townspeople in 19th century Germany, but the general concept remains the same: cooperation and mutual benefit.
Today, the money that credit union members deposit is used to fund the loans made to other members who need to borrow money. The interest that the borrowing members pay on their loans is used to fund the interest paid to member depositors. This cooperation between savers and borrowers fuels benefits for both.
If you’re an Alliant member, the benefit you personally get from your membership is unique to you, because it varies broadly depending on the amount of your savings and loans. But we do have stats on the average benefit seen by our members.
The latest evaluation conducted by CUNA found Alliant member households gaining an average financial benefit of $368 annually compared to doing business with a bank.1 One factor in that amount is the higher than average dividends that our members earn on their deposits. Our current dividend rate of 0.80% APY2 is 6.2 times higher3 than the bank national average rate. The other factor is the lower than average interest rates that our members pay on their Alliant loans. For example, our new auto loan rates are as low as 1.99% APR,4 while the bank national average new auto loan rate is 4.84% APR.5