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Credit Where It’s Due

Ron Wayne

THE BEST FINANCIAL advice I could give to a Gen Z or millennial is this: Join a credit union. But they probably wouldn’t listen.

A GOBankingRates survey earlier this year found that fewer adults under age 40 are banking with credit unions, instead preferring national or online banks by as much as a two-to-one margin. I’ve done all my banking with a local credit union for almost 18 years, and it’s provided me with a degree of personal customer service that’s likely less common with banks. This has been especially important when I’ve faced financial hurdles.

When I was in my late 50s, I was without a fulltime job for 18 months. I simply couldn’t find work related to my university degrees. During that period, I kept up with my mortgage payments but fell behind on the $280-a-month condo fee. When the condo association threatened to foreclose, I went to the credit union because it held my mortgage.

The credit union offered to add $4,000, without any interest charge, to the back of my mortgage to help me pay the fees that I owed. I had to commit to paying the condo fees on time from then on.

At the time, friends had suggested that I just walk away from the mortgage, especially because my condo’s value was then less than what I owed. My old-fashioned morality prevented me from doing so.

I was also worried that a foreclosure would affect my ability to qualify for another PLUS loan, which I needed to help pay for my son’s college housing costs. I wanted to make sure he could stay in the private university where he’d earned a full academic scholarship that covered his $36,000 annual tuition.

Staying put has proven to be the right decision, especially now that my condo’s value has been lifted by the booming housing market. While rents in my Florida town are soaring to new records, I’m still paying the same fixed-rate mortgage and condo fee that I have for the past 10 years.

How did my 18 months without fulltime employment end? Just as I’d exhausted all my savings and retirement money, a friend offered me a position at the university where I’d previously worked for 10 years. It had nothing to do with my skills or education, requiring only a high school degree. The pay was 40% less than my previous job. I would be earning what I did in my 30s, but I had no choice.

Still, in addition to a regular paycheck, the job provided medical insurance for my son and me, plus lots of paid time-off and more contributions to my state pension. Frankly, if I hadn’t taken the offer, I would have become homeless.

During my long stretch without a job, and then working for far less money than before, I almost maxed out a credit card from the credit union. It had an attractive 9.9% fixed interest rate but a higher-than-average minimum monthly payment. I didn’t want to fall behind on any bill, so I turned to the credit union again.

To help improve my cash flow, the credit union offered to transfer my high card balance without fees to a signature loan at a fixed 6.8% rate and a monthly payment of $200. In five years, my loan balance has been reduced by more than 85%.

I’ve also financed four used vehicles through my credit union during the past 17 years. Two were for me, and two were my children’s first cars, whose loans I cosigned. Each time, the credit union gave me the best rate and guided us so we’d know what car we could afford.

I always prefer to obtain financing before I shop. The credit union offered me my current car loan at just 2.44%. Thanks to a seller’s market and the loan payments I’ve made so far, I already owe thousands less than my car’s current resale value.

The GOBankingRates survey suggested that younger folks prefer an online experience for banking. But I rarely go to the credit union offices. I have a phone app that provides me easy access to current data on all my accounts. Last year, after my debit card number was stolen, the credit union suggested an app that immediately sends a text every time my card is charged, so I’ll know if it’s being misused.

At one time, credit union membership was limited to a group of employees or to certain industries. Today, most credit unions are open to all and growing in popularity—just not among the young. About 132 million Americans were credit union members in the first half of 2022, which is three million more than at the end of last year.

Earning higher rates on savings and paying lower rates on loans are the main benefits of being a credit union member. But based on my experience, I’d also recommend them for another reason—much better customer service than you’d get at most banks.

Ron Wayne spent 26 years working for newspapers in Pennsylvania and Georgia before becoming the editor in the University of Florida’s main news office. During his 10 years working there, he earned his master’s degree in mass communication and taught as an adjunct in the College of Journalism and Communications. Since retiring in 2020, he’s enjoyed a simple life, including reflecting on his experiences on Medium.com. Check out Ron’s earlier articles.

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