Other Studies

Most every study – whether conducted by researchers, the government, credit unions and even bankers – have found that banks charge worse rates than credit unions.

• In 2006 the University of Wisconsin found that credit unions that converted to banks now offer worse rates across the board. Read the study here. Here is what they found:
  
  

  Converted Credit Unions Charge More (Rates in %)
  	Credit Unions	Converted Credit Unions	Difference
  Savings
  Regular Savings Accounts	0.93	0.61	-.32
  Money Market Accounts	1.19	1.01	-.18
  Checking With Interest	0.47	0.42	-.05
  One Year CD	3.17	3.14	-.03
  Loans
  Unsecured Loans	11.02	12.14	+1.12
  Regular Credit Cards	12.03	13.49	+1.46
  Gold Credit Cards	10.38	11.16	+1.22
  Used Auto Loans	5.41	6.25	+.84
  New Auto Loans	5.17	5.83	+.66
  Home Equity Loans	5.97	6.07	+.20
  Data from Heinrich and Kashian, Credit Union to Mutual Conversion: Do Rates Diverge? University of Wisconsin, Whitewater Campus, 2006. p16. Read the study here.

  
  
  
• US News & World Report also found that credit unions offer better rates across the board. Here’s the chart from their study:

The US News article explains the reason for these differences, “With no taxes or stockholders to pay, big credit unions can pay higher returns on deposits and charge lower rates on loans” (US News and World Report, 9/27/04).

• In testimony before United States Congress, even the American Bankers Association acknowledged that credit union tax exemption (which Beehive would give up if it becomes a bank) “gives credit unions a significant price advantage over tax-paying banks that offer the same products and services and enables credit unions to grow much more rapidly.”( American Bankers Association, “Statement for the Record on Behalf of the American Bankers Association Before the House Ways and Means Committee, United States House of Representatives” April 20, 2005.)
  
  
• The American Bankers Association cited a study which also posed a connection between a credit union’s charter and their ability to offer superior rates than banks:
  
  “…Credit unions are enabled to offer a 67 basis point advantage [0.67%] in loan pricing and deposit pricing over banks as a direct result of the fact that credit unions to not pay state or federal taxes. In a highly competitive industry, the sixty-seven basis point[s] …is substantial.”** (Murphey, Neil and Dennis O’Tool, “A study of the Evolution and Growth of Credit Unions in Virginia: 1997-2002.” November 2003.)

• A 2001 study from “Economic Letters” found that the more credit unions there are in a region, the cheaper the rates on loans that banks there charge. This is because credit unions offer cheaper loans than banks, and banks need to drop their rates to compete. (Feinberg, Robert and A.F.M. Artuer Rahman. 2001. “A Causality Test of the Relationship between Bank and Credit Union Lending Rates in Local Markets”. Economic Letters 71. pp 271-275.)

• A 2003 follow-up study from the “Southern Economic Journal” found that the more credit unions in an area, the better rates available to consumers for auto and unsecured loans. (Feinberg, Robert. 2003. “The Determinants of Bank Rates in Local Customer Lending Markets, Comparing Market and Institutional Level Results”. Southern Economic Journal 70. pp 144-156.)

• A 2000 study from the “Review of Industrial Organization” found that credit unions competing with banks causes better rates for consumers, as banks have to compete with the cheaper credit union pricing. (Tokle, Robert and Joanne Tokle. 2000. “The Influence of Credit Union and Savings and Loan Competition on Bank Deposit Rates in Idaho and Montana”. Review of Industrial Organization 17. pp 427-439.)

• A 2004 American University Study determined that if half of the nations credit unions disappeared, consumers would end up paying $1.73 billion dollars more for the same loans. (Feinberg, Robert. 2004. “An Analysis of the Benefits of Credit Unions to Bank Loan Customers”, mimeo, American University.)

• A 2005 Idaho State University study found that if the market share controlled by credit unions decreased by one standard deviation, Americans would earn between $2.0 to $2.5 billion dollars less on their deposits in CDs and money market accounts. (Tokle, Robert. 2005. “An Estimate of the Influence of Credit Unions on Bank CD and Money Market Deposits in the US.” Mimeo, Idaho State University.)

• A 2003 study from the “Journal of Applied Business Research” notes that efforts to convert credit unions to mutual savings banks (like Beehive’s proposal) are increasing while the number of mutual savings bank are dwindling as more and more mutual savings banks convert to stock banks. This “calls into question the benefit of mutualization in an era of demutualization.” Over 80% of the credit unions converted to mutual savings banks have then converted to stock banks if eligible. (Kashian, Russ and Kristen Monaco. 2003. The Pricing of Thrift Conversions. Journal of Applied Business Research 19. pp 25-31.)