One of the reasons savings may have slowed at credit unions is because members are still more apt to pay down their high-cost debt first.
According to CUNA Mutual Group's June Credit Union Trends Report, on a year-to-date basis, savings are up 3.3% but far below the 7.1% gain for the same period in 2009. Overall, savings growth stands at 6.5% for the industry as of April.
Besides members paying down debt, some CUs are deterring deposit inflows with intentionally low rates in hopes of managing their capital ratios, wrote Dave Colby, chief economist at CUNA Mutual, in the report. Low yields have also inhibited growth, he added. The bulk of savings gains over the past year were attributable to money market accounts, regular shares and share drafts, the data showed.
"This tells us members believe interest rates are going to rise. The good news for credit unions is lower rates and members' desire for liquidity translates into a lower cost of funds," Colby noted. NCUA first quarter data showed a cost of funds of 1.33%, which was a 64 basis point reduction from first quarter 2009.