Open Letter to My Credit Union

I’ve been doing all my banking through credit unions since I was an undergrad at Caltech.  I’ve liked using them because they don’t, on balance, spend as much time and effort trying to trick their members into doing stupid things with their money as banks do.  Their fine print isn’t as small, or as prevalent.  Their credit cards have a reasonable rate, clearly stated.  Their checking accounts don’t have hidden fees.  They aren’t out to screw you, which most commercial banks are, as far as I can tell (certainly the ones involved in the liar-loan industry deserve that reputation anyway).

So I’m bothered that I just received several “convenience” checks from the Elevations Credit Union, linked to my Visa card, with a low introductory APR of only 3.99%.  I’m bothered because they’re trying to lure members into spending money on credit, at a time when US households are on average further in debt than ever before. I’m bothered because they’ve sent me something in the mail that could easily have fallen into the wrong hands and created a credit headache for me.  I’m also bothered that they spontaneously increased my credit limit from $1,000 to $2,500 without asking me if that’s what I wanted.  Previously, I had specifically requested they lower my credit limit to $1,000, because that’s about how much money I take home each month, and getting into more than one month’s worth of revolving debt seems like a bad idea (since the grace period is one month long).

Elevations recently re-organized as a state credit union instead of a federal credit union.  I don’t know if that has anything to do with their apparent change in character.  But I hope it doesn’t go much further than this.  Finding a new credit union would be a hassle.

By Zane Selvans

A former space explorer, now marooned on a beautiful, dying world.

5 replies on “Open Letter to My Credit Union”

Yah, I’ve been similarly dismayed with the Golden 1 Credit Union. I was a member with them from 1990 until mid-2008, at which point I finally got fed up with all of the ways that they had been trying to act less like a cooperative and more like a bank. One thing that amazed me was that they didn’t even ask me why I was closing my account when I did so. This, despite the fact that I had a long history of keeping significant balances, borrowing money and paying it back early, etc. They simply didn’t care.

So far I’ve been pretty pleased with Santa Cruz Community Credit Union – they do a good job of focusing on the “community” part of their mission.


Yeah, I think the Santa Cruz CU is about as retro-crunchy as a financial institution can get. It’s hard – you want them to be business minded enough to remain solvent, and administer themselves efficiently, but if they get too enthusiastic about it, they become just another predatory financial organization, trying to manipulate instead of serve. Seems to be a fairly general problem with Co-ops.

Hi Zane,
Thanks for voicing your concern and for being a member. I’m the VP of Marketing at Elevations Credit Union and am always interested in what our members have to say.

In response to your concern about the letter checks – these VISA letter checks are part of a larger strategy to help members that have credit card debt with other card holders to tranfer that debt to us. Most other credit card companies have terms and conditions that are not as consumer friendly as ours. You seem pretty savvy so you probably know about the unversal default rates in most credit cards that result in effective rates of 19% – 39%. The way consumer get stuck in these high rates is very easy; to the point that a very high percentage of credit cards are now at this default rate. We would prefer members not have debt, but that is an unreasonable expectation so if they do have debt they be with a company and a credit card that has consumer friendly terms and conditions. Our credit cards do not have unversal default rates and that is reason enough to keep our credit card as the first credit card to use. It is not only about increasing debt, but managing debt better. You can imagine what would happen to your monthly payment if your credit card went from 0% to 33% due to a universal default rate.

Regarding the balance increase – we have not done a balance increase on our credit card portfolio for over 6 years – we were just trying to get our balances in line with industry standards so members would be more inclined to use our card – again to avoid some of the extreme terms found in other credit cards. We also heard from our members, a high percentage of which pay off their balances monthly that they wanted higher limits for travel, purchases and to accrue points faster.

Regarding our conversion from a Federal Charter to a State Charter – the credit card letter checks and balance increase are not associated with our charter conversation in any way – we would have done this regardless of our charter. The change to a State Chartered organization was directly related to our need to more accurately reflect our field of membership. The Federal Charter is an excellent charter, but was too restrictive in field of membership adjustments.

The good news in these times of financial turmoil is Elevations Credit Union is financially strong and healthy and our deposit insurance fund through the NCUA is strong and healthy insuring deposits up to $100K ($250K for IRAs). You can view our 2007 Annual Report with the complete financials on our website,, go to About Us. We did not get involved in the sub-prime or Alt-A mortgage mess that is causing so much stress to the financial sector. Our loan and deposit portfolio is sound, including mortgages, and we actively avoid the punative terms and conditions found in other “non-credit union” financial institutions.

Thanks again for your loyalty and for sharing your concerns.
Rich Jones, VP Marketing, Elevations Credit Union

Wow, thanks for the explanation Rich. I appreciate your taking the time to get back to me, and I’m sure that I would not be having this interaction if I were banking with Washington Mutual JP Morgan Chase. Hopefully others who are curious will also find this response.

Of the several suggestions listed in the cover letter which accompanied the convenience checks, paying off a credit card with a higher interest rate was by far the most reasonable, and I agree that if used in that context, the checks are a service to the credit union’s members. However, the other suggestions:

Make a down payment on a car
Buy some much-needed furniture for your home
Get a new computer
Get away from it all and recharge your batteries on that vacation you’ve been thinking about
Or anything at all!

were somewhat less prudent. It was these suggestions, coupled with the temporary promotional interest rate, and the generic happy-talk marketing tone of the letter (e.g. “The sooner you make a purchase with the check, the longer you will get 3.99% APR” and “Now we’re rewarding you with another perk — a special low introductory rate on your credit card purchases.”), that left me suspicious of the credit union’s motives.

If the information associated with the convenience checks had instead been focused on informing members about the hidden pitfalls and high interest rates associated with many other credit cards (e.g. universal default), and had clearly stated the long term interest rate charged by the credit union compared to the national average credit card rate, I likely would have come away with a very different impression.

I’m happy to hear that Elevations, and credit unions in general, have been prudent in avoiding the dodgy finance practices of the last few years. Now, if only there were some way credit union members could avoid being taxed to bail out all the financial institutions that weren’t so cautious.

I totally agree Zane, the pitfalls of universal default rates is a great story and I hope your readers get that message from this email string. Unfortunately, most consumers are not as savvy as you and they don’t know they have these unfriendly terms in their credit card. We do have great info on credit cards, and other financial issues on our website in a couple of areas: under RealityCheck and also in a FoolProof module. FoolProof is a financial education program that teaches members how to become smart consumers and RealityCheck is a web domain with a focus on unbiased consumer advise and information written and copywrited by Remar Sutton, a nationally recognized consumer advocate. We know that a smart, educated consumer will be a successful consumer and if our members are successful, we will share in their success. Most financial institutions know an uneducated consumer increases their fee income… There is a huge difference. Thanks again for your interest and this dialogue. By the way, your readers should know when or if the bill passes Congress, credit union savings accounts will be protected at the same levels – $250K – as the banks by the NCUA (National Credit Union Share Insurance Fund), a federally backed insurance, just like the FDIC. Rich Jones, VP Marketing, Elevations Credit Union.

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