Help us fight for Interchange

Your debit or credit card transaction goes something like this: You buy something at a retailer, either online or in your hometown, and you go to pay with your card. Your payment gets split, with a tiny percentage going to Visa or MasterCard, and the rest going to the merchant.

But now Congress is looking to change the whole system in a way that hurts American 1 and other financial institutions.

Merchants pay a fee for the privilege of using Visa/MasterCards payment infrastructure. That’s called interchange. Visa and MasterCard pay card providers, like American 1, a bit of that interchange for being a part of their system.

Everyone wins. The merchant gets an ease-of-use system for payments, Visa gets some income from the merchant, and we, as a credit union, get a fraction of that income for providing the debit or credit cards. Interchange is great because it helps credit unions of all sizes to issue debit and credit cards. We see interchange as a merchant’s fair share of the costs of this convenient system.

But it’s more than just convenience. Merchants, the ones taking the Visa or MasterCard payment, pay a small fraction for this service and reap most of the benefits, all while assuming none of the risk. American 1 has to cover the costs for fraud, card errors, and serving debit and credit card accounts. All the while, merchants benefit from the increased purchasing power such card systems provide. When you have a Visa account, for example, it’s easier to pay for more and bigger stuff. The merchant gets all that income, and only has to pay a small, single-digit percentage back to card issuers to maintain the system.

If credit unions like American 1 didn’t provide debit and credit cards to our members, imagine what would happen to local businesses. Or online retailers. Now think about all the other credit unions and banks across the nation. We all have to provide debit and credit cards, and providing that system costs money. The only way we can pay for this convenient system is to charge a fair interchange fee.

Now, Congress is looking to change the interchange fee structure, which means American 1 and other card providers could get less income for providing debit and credit cards. If this happens, our debit and credit card system could cost you, the member, more.

If interchange were reduced and could no longer adequately support American 1’s card system, you, as members, may end up paying more to use your debit and credit cards, or we may no longer be able to offer cards at all. Members of Congress should oppose merchants’ proposals to reduce interchange.

So we’re fighting back with a petition. You can stop in to our Home Office or Argyle Branch locations this week to sign the petition telling Michigan’s senators, Carl Levin and Debbie Stabenow, that we don’t want them messing with interchange income. Use those links to e-mail your senator, and your local Congressional representative, and tell them we don’t want any reduction in interchange income.

Credit unions share what banks don’t

A brief story to highlight what the credit union difference can really mean.

I found a credit union in Wisconsin, Kohler Credit Union, that offers what they call “bunny slippers services” – essentially, convenient online banking services much like we offer through A1@home. Except they built an entire web site for Frank and Eddy, their bunny slipper mascots. To promote the service, Kohler gives out bunny slipper window clings and if you’re caught with one on your car, they give you cash. Cool idea, right?

On a whim, I ordered a few of the window clings for a few of us around the office. Not that a Kohler representative is going to be touring around Jackson looking for bunny slippers on someone’s car. But it’s a neat idea, and we wanted to have some fun.

I got an e-mail from Kohler’s marketing coordinator thanking me for ordering the window clings, and we had a bit of fun talking about it.

What bank would do that?

In the credit union world, we tend to share and exchange ideas instead of keeping everything secretive. It’s a testament to the cooperative nature of our business. Because we work at service above everything else, we’re not so preoccupied with making the big money banks do.

That’s the credit union difference.

Forbes says credit unions beat banks for students

We think credit unions rock. But don’t take our word for it.

Forbes reports that credit unions make all kinds of sense for students heading off to college:

There are about 600 credit unions at either educational or health institutions, according to the Credit Union National Association. At Princeton University, the Princeton Federal Credit Union offers students a checking account with no minimum balances, no monthly service charge and free checks. Try getting that from a for-profit bank…In addition to generally lower costs, university credit unions often cater specifically to student customers. Joyce Banish, vice president of university and community public relations at Michigan State University Federal Credit Union, says the coop aims to help students build a strong credit record.

Because of our cooperative nature and not-for-profit structure, credit unions have the flexibility to offer students great deals on auto loans, credit cards, and checking accounts.

And unlike banks, credit unions are looking to prey upon college students just to earn a few new credit card accounts.

NAFCU congrulates American 1 on earnings

We received a nice letter from Fred Becker, president and CEO of the National Association of Federal Credit Unions (NAFCU), congratulating American 1 on our 2008 earnings. We had a good year in 2008, and Becker wanted to thank us.

Click for a readable copy of the letter.

American 1 auto loan experts: here’s the proof

We pride ourselves on being “auto loan experts.” Chances are, if you need a used car, we can get you financed and into a vehicle.

But how can we prove that? Where’s the evidence of our expertise?

It’s provided by the National Credit Union Administration, the FDIC of the credit union world. If you take a look at our 5300 report (an overall report showing how many members we have, how many loans, etc.), you’ll find we have 7,215 used vehicles on our books. We have a few hundred new cars, but we specialize in used auto financing. It’s what we do best.

Now, how many auto loans do all the other credit unions in Jackson County have? Just about that many: 7,187. But that’s combined. Add them up, and all the other credit unions in town have a total of 7,187 used auto loans. We have 7,215.

So if you have an auto loan financed through a credit union in Jackson County, chances are 50% that it’s at American 1 or some other credit union. We have half of all the used auto loans in Jackson County.

Pretty cool, huh?

Some of the other credit unions have mortgages on their books, or they specialize in new vehicle financing. For American 1, though, we’re all about used cars, trucks, vans, and SUVs.

Now we have the numbers to prove it.

NYT: Credit Unions less likely to charge extra credit card fees

Wondering how the Credit Card Accountability, Responsibility and Disclosure Act – signed into law last month – will affect your American 1 Visa card?

Hardly at all.

That’s in line with what the New York Times found in its own study. The newspaper found that the outrageous fees banks charge on their credit cards, the same fees that the new act combats, aren’t an issue with credit union-issued credit cards:

Credit union cards demonstrate that punishing fees are not an essential ingredient of profitable lending. This should help assuage fears that the credit card act will bring disaster for credit cards. Rather, it should nudge them toward the gentler credit union model that many Americans already enjoy.

As we update our disclosures and Visa card brochures, we’ve already noticed that little will have to be changed on American 1’s end. That’s good for us and good for you, and that’s just the way we like it.

Head to our Operation: Your Best Interest site to learn more about deceptive big bank credit card practices.

What young people think of credit unions: a sample

DeAndre’ Upshaw from Young & Free Texas interviewed students at Baylor University to see if they knew what defines a credit union.

What he found is interesting: young people are looking for security, transparency, and a safe place to put their money. The trouble is, few knew what defines a credit union. The students’ responses aren’t unique – many older members don’t know what makes a credit union a credit union, either. So it’s up to us to help define it for them.

The Credit Union National Association (CUNA) gives a good, short answer, and there are tons of resources out there to help you learn more.

Message from the NCUA: ‘Your money is safe’

A message from Jane Bryant Quinn and the National Credit Union Administration. Learn more about your share insurance on their site.

State of the credit union

On Thursday, we held a “State of the Credit Union” presentation for local treasurers, business leaders, and organizational leaders where we outlined how we did in 2008, and what we’re working on for 2009.

Above all? Despite the economy, we did pretty well for ourselves.

American 1 had a good feeling as far back as April, and even during the summer before the big economic crisis hit, that we were doing okay. Others were saying that credit unions were among the safest places to put your money.

And now, as we look back on the crazy year that was 2008, we can say we did the right things to keep our ship upright and sailing steady.

We have the wisdom of our board of directors and the support of our members and the community to thank for our success. With all the doom and gloom around us these days, it’s nice to be seen as a secure place to save for the future.

Economy: taking the long view

Here’s a little something we came across while cleaning out some old newsletters. It’s an article in our January 1982 newsletter about the Jackson Co-Op Federal Credit Union lending when no one else would.

Sound familiar?

Jackson Co-Op is now American 1, but we find ourselves in a similar situation. When many banks are restricting their lending practices, American 1 is still providing loans to those who need them.

In 1982, prime lending rates were at 16%, compared to 3.25% today. The economy was in a recession then, too.

But even with the economic weirdness, we were lending to our members. Just like today.

Nice to know some things don’t change.