“It’s the highest credit card interest rate I’ve ever seen.” said Marylin Ball Brown, CEO of Generations Credit Union of Olympia, WA. “In the 1980’s the rate would have been considered usury. It is an example of the difference between for-profit banks and not-for-profit credit unions.”
Wingate’s increased APR was the result of a predatory banking practice already addressed by the Obama Administration’
While it curbs future abuses, the legislation unfortunately could not return Wingate’s interest to a traditional rate. For immediate help the family turned to their local, not-for-profit credit union. Generations, a small credit union located a few blocks from the Washington state capital, saved the family $33,000 over the life of the credit card by transferring the $10,400 CitiBank card balance to an unsecured loan with a traditional rate of 12.2 percent.
“Our credit union was able to help the Wingates as part of a national program called the American Debt Relief Challenge,” said Ball Brown. “The projected savings for Michael’s family of moving the balance of his card to our credit union is over $33,000.
“Some families are saving close to $200 a month through credit unions participating in the American Debt Relief Challenge,” said Scott Butterfield, program co-founder. “The goal is to save consumers $300 million.”
Butterfield explained that millions of Americans are burdened by bank credit cards defaulting to all time high interest rates as a result of the banking credit crunch and drive to increase profits. The American Debt Relief Challenge measures the projected savings from transferring a consumer’s high interest bank credit card balance back to a traditional rate at a not-for-profit credit union.
National consumer advocates backing the program include authors Denise Richardson, Give Me Back My Credit and Bob Manning PhD, author of Credit Card Nation. “This program works because not-for-profit credit unions have lower credit card rates than for-profit banks and none have default rates in the twenties like banks," said Richardson "When you transfer your debt to a credit union, more of your monthly payment is applied to reducing the debt and less to cover a high interest rate."
Credit unions can’t charge the high interest rates that banks are imposing on consumers. "The NCUA is responsible for enforcing an 18% interest rate ceiling, which is in the Federal Credit Union Act and applies to all federally chartered credit unions,” said John McKechnie, spokesman for the National Credit Union Administration.
“Families across America deserve better than predatory banking practices like these sky high default rates,” said Ball-Brown. “We don’t even have a default rate and never will. Our credit union exists to help people as a service organization, not to maximize profits.