X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON – While the Federal Reserve’s latest increase saw the federal funds rate go up to 2.75%, credit unions aren’t likely to raise deposit rates each time the Fed bumps up rates. According to Callahan & Associates, Inc., the rates that credit unions pay on their money market accounts certainly were not in step with the Fed’s moves. Money market rates rose only 13 basis points to 1.20% as of December 2004. To add some context, some 52% of the 3,158 credit unions that offer MMAs did not raise rates during the fourth quarter. Surprisingly, 1,366 credit unions have not moved rates since June 2004. As of December 31, 2004, money market shares comprised 28.3% of total credit union shares, Callahan said. By not raising rates on money market shares, credit unions are keeping their cost of funds low, while at the same time raising rates on variable rate loan products. These actions, at least temporarily, can help a credit union’s net interest margin dilemma, Callahan said. According to DataTrac, credit unions are still paying well above what banks are paying on money markets and that is to be expected, Callahan reported. The average money market rate is .75%, with credit unions exceeding the average by 34 basis points and banks trailing by nine.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.