Bank? Who Needs a Bank? Well, Who Needs A Credit Union?

Andy Sernovitz's post "Where Are The Credit Unions?" was great, but it missed the mark by a moon-shot. The question isn't "Why aren't credit unions taking advantage of the moral mess banks are drowning in?" The question is, "Why aren't you joining a credit union right now?" The answer to that question really has to come down to ignorance, probably not a politically correct thing to say, but the truth. Most people probably don't know they are eligible to join a credit union.

First, a disclaimer: I am a big fan of credit unions in general, and have served as the independent consumer spokesperson for some big ones in this country for years. But I can speak out because I am also a big critic of many credit union practices.

But here's a fact: the worst credit union (and there are some bad ones) is better than the best bank when it comes to pricing almost all of its loans and most of its other products. Credit unions really do feel like it is their obligation to find you the cheapest product rather than the most expensive product. You cannot say that about virtually any bank and definitely not about any for-profit "specialty" loan company--like the loan companies used by car dealerships and many mortgage brokers.

These guys practice "predatory pricing"-- if you don't know how to ask for a lower price (or know that you can ask for a lower price) you will pay more. Thousands more on the average used car loan, for instance. For years, I've headed a task force that tracks auto dealership tactics, and here's a steady statistic. Consumers that have financed a vehicle at a car dealership and then refinanced it at a credit union save on the average of $1,800 by refinancing.

Credit unions don't work to find members the lower price because they are goodie two-shoes, either. Because members completely own the credit union, the financial well-being of the member has a direct impact on the well-being of the credit union. Ergo, helping members make wise decisions is a wise decision.

Okay, I'm preaching too much, so let me get back to Andy Sernovitz's post, and why its question is so off base . Actually, this is probably preaching, too, but too bad.

• Credit unions haven't reacted as a group to the bank crisis for a very charming reason. They aren't slick marketers on the whole. The big credit unions who have more marketing savvy and bigger budgets are out there with strong "Safe Harbor" messages. But the vast majority of credit unions are small, even intimate, businesses that don't have the word slick in their spell-check. A lot of their staff members actually wake up many morning feeling good about the member they helped the day before. They wouldn't know derivatives if they bit them.
• Small credit unions also have small marketing budgets--and their marketing is targeted to their membership, so the public doesn't see it. Why small marketing budgets? Because most of them had rather keep that money to benefit members in loan and savings interest rates.
• Some credit unions are very involved in the most important aspect of recovery from the economic mutilation of our economy They are teaching young people the truth about money and the realities of the free enterprise system. Here's the message. If you think you can believe all the advertising you see, and if you think you're going to get the best product or service because you're nice, you're a fool.
• Right now AOL's "WalletPOP" is featuring a column on a credit union program called FoolProof. FoolProof deals with the realities of money and the free enterprise system. I am the (non-paid or compensated) chairman of this initiative. If Andy Sernovitz wants to know what some credit unions are doing about marketing, take a look at this program and the WalletPOP column. Here's an example of valuable credit union marketing: telling the truth about something, for a change! I'll wager you will not find any bank in America who is as honest with its customers about money, credit cards, and credit as this single credit union-sponsored program.

So, Andy, the final question: After ranting about credit unions as rotten marketers while praising them as great sources for consumers, did you join one?