Letter: Consumers benefit from having choices

There has been considerable attention paid to credit unions and their not-for-profit status.

Bankers say it is unfair for consumers to have a financial alternative — one that provides consumers and small businesses with the opportunity to access financial services that are priced at better rates and lower fees.

When talking about not-for-profit credit unions, banks complain about needing a “level playing field.” With banks controlling approximately 95 percent of the commercial loans underwritten in Iowa, it seems the field is tipped in their favor. But popularity doesn’t translate into the best solution. Small businesses, the engine of Iowa’s bustling economy, often find themselves without access to reasonable credit because banks don’t focus on the needs of this market.

For example, 48 percent of the business loans provided by credit unions are for less than $50,000. While $50,000 may seem like a significant number, it isn’t to the bank unwilling to take the risk because the transaction won’t generate enough revenue to make it worth their time and resources. And, even if the bank chooses to extend credit at this level, it doesn’t always offer the best rates or fee schedules.

This is why it is important to leave the credit unions as is. As a not-for-profit, credit unions are driven to meet the needs of their members. They return more than $100 million annually through better rates and fees. Ultimately, they are working for the 1.1 million members who understand that credit unions serve the Iowans the banks won’t.

Erik Shewmaker

Iowa City

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