The latest report by the National Credit Union Administration (NCUA) indicates that unsecured personal loans outpaced credit card volumes.
- Credit union loans outstanding increased 1.0% in December, compared to a 0.6% increase in November of 2021 and a 0.2% increase in December of 2020.
- Unsecured personal loans led loan growth during the month rising 2.6%, followed by credit card loans (2.3%), fixed-rate mortgage loans (2.0%), home equity loans (1.2%), adjustable-rate mortgages (1.0%), used auto loans (0.7%), and new auto loans (0.3%).
- On the decline during the month were other loans (-1.8%) and other mortgage loans (-0.6%).
According to the report, credit union memberships increased by 0.2% during February and now stands at 131.8 million, encapsulating more than half the United States’ adult population of 258.3 million.
Average loan rates on credit cards slipped slightly from 10% to 9.9%, traditionally at least five full percentage rates lower than credit cards. Unsecured lending rates held at 10.6% for the past three months, slightly down from the September 2021 high of 10.7%.
Credit unions hold an 11.4% market share of total consumer loans and a 13.6% rate of non-revolving (installment lending) consumer debt.
The number of credit unions fell slightly between September 2021 and year-end 2020, starting at 5,204 credit unions and ending at 5,092. The net interest margin and yield on total assets dropped, from 353 basis points (bp) to 303 bp and 283 bp to 303 bp, respectively.
Top U.S. bankers might be interested in how credit unions stack up in size. Of the 5,092 credit unions, 1,654 have assets less than $20 million—this segment serves 1.7 million members. Conversely, only 402 credit unions have more than $1 billion in assets, serving 88.1 million members
- Between the $20 to $50 million range, 921 credit unions serve 2.8 million people,
- With $50 million to $100 million, 703 credit unions are serving 4.3 million members
- At $100 million to $250 million, 732 credit unions support 8.9 million members
- Total assets of $250 million to $500 million rack up 9.8 million members
- $500 million to $1 billion in assets serve 14.4 million members.
All totaled, the 5,092 credit unions support 138 million in members. If considered as a group, credit unions outpace most top banks.
For credit card followers, know that 63.5% of credit unions offer credit cards, but 99.4% of credit unions offer unsecured loans. The real sweet spot is in delinquency rates, where total delinquent credit cards are a mere 0.88%. With delinquency rates like that, you can afford the low interest rate on credit cards!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group