VIRGINIA BEACH, Va. — As credit card issuers across the country slap on fees and raise interest rates — to the point the president of the United States felt he needed to step in — one credit union CEO decided to make a "statement."
Ron Burniske, CEO of Chartway FCU here, slashed his members' credit card interest rates by 10 basis points, regardless of credit line or length of time with the CU. Rates previously ranged from 10.99% to 18%.
Burniske told Credit Union Journal that a Chartway employee whose wife works for Bank of America told him a story last month that infuriated him. The couple's interest rate on their B of A credit card was raised to 18% from 5%, despite the fact they had never been late on a payment.
The next day, Burniske saw a discussion of credit cards on several national television news programs detailing evidence of rising rates and fees across America. In every report, he recalled, credit card companies justified the increases based on the sour state of the economy.
"My first reaction was raising rates on consumers at this time is unethical," he said. "I also saw it as an opportunity to make a statement, because no one on any of these shows told people there is an alternative to Bank of America or Citicorp - your local credit union. I'm trying to take the lead and get the word out about credit unions."
Never Cut Anyone's Credit Line
Unlike many credit card issuers, Chartway has never cut anyone's credit line, and in fact is looking to increase credit lines for its members, Burniske said. The CU does not impose transfer fees or balance increase fees. He said the only two fees members have to pay are a charge of 5% of the minimum payment on a late payment, and the interest rate linked to the card.
"And believe it or not, we still give cash back on our credit cards - 1% on charges," he said. "We were one of the first to offer cash back, and we counsel our members to use their credit cards for every purchase they can. That way they have a permanent record of their spending, if there is a dispute they can get it taken care of, and they get money back."
Some members earn $300 or $400 a year in cash back from their credit cards, Burniske noted.
Members Pleased
The interest rate cut has elicited numerous positive responses from members, Burniske reported. He said many volunteered to tell their friends what a benefit it is to belong to the credit union.
"We're about helping the member and what better time than right now when people are struggling? We had to do it," he declared. "We hold the spirit that we are here for the member in good times and bad. This was an appropriate time to do something-Congress is talking about doing something with credit cards and [President] Obama is talking about credit cards, but that won't help because [credit card companies] are going to keep doing what they are doing."
Chartway issued a press release noting the reduction in credit card interest rates that drew inspiration from the classic 1976 film "Network," which featured Peter Finch as fictional news anchor Howard Beale. Beale's on-air rant that he is "mad as hell, and I'm not going to take this anymore" is transformed to: "Chartway Federal Credit Union's CEO, Ron Burniske, is as mad as hell - and he's doing something about it. He's lowering credit card rates."
Burniske said the goal of the release was to raise awareness not only of Chartway, but by extension, the entire CU movement.
"What is really interesting is only one local TV station picked up our press release. I truly believe most people don't know what a credit union is. We sent our press release to Obama [April 23, the date the president met with credit card company executives at the White House] because we doubt anyone on his staff knows what a credit union is. Credit unions didn't start this mess and we're surely not trying to contribute to making it worse by putting it to the consumer. We don't want to lay a rate increase on consumers. If we truly want to help we need to let people have confidence in the system."
