Members Drain CU Accounts To Pay ForSpending Binge
MADISON, Wis. - (01/04/06) Credit union deposits declinedagain in November, for the second month in a row and the sixthmonth in 2005, as American consumers continued to fund theirspending sprees from savings. Members drained almost $3 billionfrom their credit union accounts in November, and almost $6 billionsince the end of September, according to CUNA. Basically,total (credit union) savings are back to where they were at the endof March, said Bill Hampel, chief economist for CUNA, whoexpects full-year growth around 3%, the lowest on record.Two things going on here, Hampel told The CreditUnion Journal. One is the consumer sector has been going ona spending spree for 11 years, creating a negative savings rate.People are spending more than they earn. In fact, datacompiled by the Federal Reserve shows that consumers will spendmore than they earn this year for the first time since1933at the height of the Great Depression. The second trend,according to Hampel, is credit unions are continuing to keep theirrates near all-time lows, discouraging new deposits. While the Fedhas pushed rates up on money market accounts above 4%%, creditunions have kept their money market rates around 1.9%. Rates paidon regular shares have also stayed historically low. The result islow savings growth, he said.