Study Refutes Common Assumption That Members More Affluent Than Customers

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Despite frequent banking industry claims to the contrary, bank customers have higher incomes and greater wealth than credit union members, according to new analysis of Federal Reserve Board data.

In the third edition of a study entitled, "Who Uses Credit Unions?", the Filene Research Institute said it has found the new data supports earlier findings regarding differences between the financial profile of bank customers and credit union members. The study found that consumers who say they use credit unions only earn an average of $34,948 annually, compared with $37,004 for those who said they use banks only. Consumers who said they primarily (but not exclusively) use credit unions earned $52,423 annually, compared to consumers who said they primarily use banks who averaged $60,646 in income. The unbanked reported income of $11,307 annually.

"It reconfirms and updates research findings that run counter to two general perceptions about credit unions and statements often made about credit unions," states the report. "One, that credit union members are more affluent than bank customers, and two, that people are exclusively members or non-members of credit unions."

Researchers Jinkook Lee and William Kelly divided the Fed's survey of 4,449 households and combined it with data available from the Statistics of Income Division of the Internal Revenue Service to arrive at their findings.

The authors noted that the research shows "striking evidence of why using 'member' versus 'non-member to categorize the population can produce a clouded view of how households use financial institutions." They added that research that lumps various subdivisions or groupings together under one headline, "members," masks a "large, underlying variation in demographic characteristics based on degree of affiliation with a credit union."

In addition, the new research also updates data on age, income, wealth, education, race, ethnicity, gender, marital status, and geographic characteristics of heavy, light and non-users of U.S. credit unions.

The researchers divided U.S. households into five categories: (1) those that use neither banks nor credit unions, (2) those that use credit unions but not banks, (3) those that use banks but not credit unions, (4) those that use both banks and credit unions but mostly credit unions, and (5) those that use both but mostly banks.

The least affluent group of households uses neither a bank nor a credit union. The next least affluent group uses credit unions only. Households using banks but not credit unions are more affluent in terms of income, financial wealth, and total wealth.

"The implications of Who Uses Credit Unions? are far-reaching for member and non-member demographics," says Bob Hoel Filene Executive Director. "For example, the under-35 age group has the highest percentage of households using only a credit union and 65-74 and 75-plus households have the highest percentage using only banks. By race and ethnicity, African-American households are more likely to use a credit union than any other ethnic group, and about 50% more likely than households overall."

The Filene Institute said that the data should be used by marketers, government relations specialists and senior executives to pursue recruiting, promotional and policy programs based upon verifiable research data.

"Age-related findings show that older age groups are most likely to use banks only, and younger age groups are most likely to be unbanked," the Filene Institute said. "These findings are critically important to the marketer planning new member recruitment campaigns, the manager deciding which new products to offer to members, and the lobbyist working to educate legislators on credit union positions."

CUJ Resources

Copies of Who Uses Credit Unions? Third Edition, and other Filene monographs are available free to Institute members. For info: (608) 231-8550 or visit at

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