The Spectrum of Credit Union Financial Literacy Programs

Credit unions are known for providing financial literacy programs for their members, but what are you doing? Are you doing enough? Are you starting at the ages that are most likely to change behaviors? And do you serve your entire membership or are you ignoring important market segments.

It's important that you provide financial education to a broad spectrum of people-not just new immigrants or people at the south end of the income spectrum. The credit crisis is showing up beyond the subprime mortgage market. Homeowners with solid credit are starting to come under the same financial stress as people with subprime credit. While the default rate for prime mortgages is still far lower than for subprime loans, problems are growing in other areas as well-credit card delinquencies, home equity lines of credit, and even auto loans.

That's all the more reason credit unions should be paying attention to financial literacy.

Nearly 80% of credit unions with assets of $10 million or more offer financial education to adults (i.e., those 18 and older) or youth (i.e. those age 17 and younger). But only a little more than half of the credit unions we surveyed are providing information to both adults and youth (Fig. 1).

In general, the likelihood of offering financial education and concentrating those efforts on both adults and youth increases as asset size increases (Fig. 2).

The good news is credit unions with $50 million or more in assets are more likely than they were in 2005 to offer financial literacy programs (Fig. 3). (2005 data is not available for credit unions with assets of less than $50 million.)

Means of communicating information to adults

Credit unions that provide financial education geared toward adults rely heavily on printed newsletters, their web site, seminars/workshops and, to a somewhat less extent, statement stuffers as the primary means of communicating information (Fig. 4).

The use of seminars and workshops increases with asset size. About a third (35%) of the credit unions with assets of $10 million to $20 million use seminars and about 95% of those with assets of more than $500 million have face to face meetings with members.

Activities to attract younger members

Credit unions that provide financial education geared toward youth engage in a wide range of activities to serve young consumers, lead by providing classroom presentations, offering a savings club, handing out coloring/ activity books, encouraging current members to have their kids join the credit union, and providing a variety of promotional products.

Half to three-quarters of those offering youth financial education employ these approaches in an effort to attract younger members (Figs. 5a and 5b).

Involvement in classroom presentations, workshops/seminars on financial- related issues, job fairs, online web tools like Googolplex and Guides to Independence, the JA Biz Kids PBS project, and in-school credit union branches all tend to increase as asset size increases.

Additionally, involvement in financial education happens most often among those credit unions that have financial-literacy-related responsibilities included in staff job descriptions, that make "increasing members' financial literacy" a formal part of the credit union's written strategic plan, and have a separate budget line item dedicated to financial literacy.

Involvement with counseling entities

A total of 45% of credit unions that offer adult financial education make financial contributions to a non-profit credit-counseling agency, while nearly 35% use financial-counseling services, such as Accel, Balance, or Financial Finesse (Fig. 6).

Involvement with non-profit credit-counseling agencies and financial-counseling services increase as asset size increases.

Future plans to provide financial education

We can anticipate that credit unions' support of and involvement in financial education activities will continue to grow above current levels.

Nearly 60% of credit unions that do not currently offer adult and/or youth financial education indicate they are at least "somewhat likely" begin doing so within the next 18 months - including more than 15% that "definitely will" do so (Fig. 7).

Next: What Keeps Credit Unions from Teaching Money Skills?

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