However, as reported by community banking trade publications, the trend could harm locally-managed credit unions. When consumers pay down a credit card balance, the issuing bank becomes recapitalized and can profit by loaning out that money to other customers. But, by closing out or failing to roll over a CD, credit union members pull money from a cycle of lending that favors local homeowners and businesses.
In response, some credit unions have launched or expanded their own credit card offerings, including inexpensive balance transfer options. Analysts note that credit unions can regain balance over their portfolios by gaining more comprehensive knowledge about their members' overall financial strategies.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.