In a recession defined by collapsing financial giants and the subsequent government bailouts, there is a success story to be found among local credit unions.  While profit-seeking banks are struggling to extend loans to the community, non-profit credit unions have weathered the economic storm and continued to provide quality member service.

The consumer shift to a cooperative bank rather than a traditional bank is easily explained; local credit unions offer much more to their members than traditional banks do. In the United States, there are approximately 7,800 credit unions serving 92 million Americans.

The UMassFive College Federal Credit Union, which in the last year experienced its largest member growth in a decade, illustrates the recent success of such institutions. The credit union offers a host of services and savings for its members, such as better rates on savings accounts as well as lower interest rates on loans. 

The ability of credit unions to provide such services rests on the idea that credit unions do not operate their establishment in order to make a profit. This fundamental difference from a commercial bank allows credit unions to focus on quality member service rather than stock price.

“Since the profit is de-emphasized, it allows us to keep our focus on member service rather than risky derivatives and commercial investments,” said Jon Reske, vice president of marketing at UMassFive.

In addition to more competitive member interest rates, the Hadley-based credit union saves members “$200 a year compared to traditional bank,” said Reske.

That’s not just because fees are lower, but also because the staff advises members on how to avoid being charged at all.

The credit union promotes fiscal responsibility by issuing credit cards that have a $500 student limit to help students avoid getting in over their heads.  But UMassFive’s benefits are not just limited to monetary savings: the member community is entitled to a personalized banking experience, which includes classes and workshops on how to invest and borrow wisely. Next year, the credit union will debut a five-part workshop on how money grows.

“Our student members are very important to us,” said Reske. “We are currently focusing more on students than ever before.”

This focus includes panels of students who are members of the credit union who give insight on how to improve businesses, as well as specialized loans for items like a computer or a bike which feature low interest rates and can be paid back over four years.

Membership in UMassFive is restricted to students and faculty of the five Pioneer Valley colleges, but student members can continue to take advantage of these benefits even after graduation.

“Once a member, always a member,” said Reske.

Credit unions rely on fundamental business methods to attract new members.

“Much of our business relies on our reputation, and we attract members mostly through word of mouth,” said Reske. “Our only purpose is to provide service to our members.” 

Matt Bouteillier can be reached at [email protected].