Credit unions are in a unique position to become an invaluable resource to the general public during a time of need. Not only is now the perfect time to help individuals make smarter and more forward-thinking decisions when it comes to their finances, but credit unions can take advantage of this turbulent time and be an anchor for their members and non-members alike, by offering more personalized financial journeys through innovative and practical services.
One of the most important ways in which credit unions can provide value and support to their members comes by way of offering products and services that will simplify and enable their ability to instill better financial habits during periods of high inflation.
When inflation is on the rise, members become more concerned than ever about everyday purchases. Bills don't automatically disappear, groceries still need to be purchased, and cars need fuel in order to get to and from school or work. Credit unions have an opportunity to remind members that existing reward programs offered through their credit union give the member the ability to earn cash back or other incentives on these and other necessary purchases.
But the key isn't to just get people to use their credit union's credit card more frequently. It involves getting them to do so as responsibly as possible as well. Rising inflation often means rising interest rates, so members should be encouraged to pay off their monthly balance or pay more than the minimum payment if possible. Gear those aforementioned incentives towards essential purchase categories like food and fuel to better help people get what they need, as opposed to things they may want that aren't essential.
Along the same lines, it's critical that credit unions offer education in addition to financial services. In essence, members should be guided to the right tools in the first place that will help them accomplish their financial goals.
Help members understand that even if they don't necessarily "need" a credit card, and they typically use their debit card for essential purchases, it's still a good idea in many situations to get one anyway. A credit card can help people raise their credit score, which can make it easier to get things like a mortgage with more favorable rates in the future.
However, a credit card may not actually make sense given what a particular member is trying to accomplish. For example, if they're attempting to make a particularly large purchase (or are trying to consolidate other debt into a more manageable payment), a high interest rate credit card may not help as much as it may seem. In that case, a personal loan may be the way to go.
Always make an effort to understand exactly what a member needs before recommending a particular service. That way, you can educate them about what you offer and which selections make the most sense given their situation.
Another way that credit unions can help their members during periods of high inflation has to do with helping them better understand their financing options.
For the sake of example, say a member has taken out a personal loan with a variable interest rate in the last five years. When that loan originally began, the interest rate may have been very favorable. But with high inflation comes potentially high-interest rates, so they may no longer be saving as much money as they once were. Instead, they should be encouraged to switch to a fixed-rate personal loan to help present this type of issue.
Especially in periods like the one we're currently experiencing, it is pivotal to remember that a credit union's job is ultimately to help its members. You can't get to that point if you're only pushing one or even a select few options when it comes to financing. Credit unions need to help people understand the full array of options, along with the pros and cons of each, so they can make the most informed choices possible given their situation.
Finally, credit unions can help members with regard to inflation by providing a legitimate sense of community to those in need. People choose credit unions for more than just basic banking services. They want a resource they know they can trust to help them become more financially fit. They're looking for an organization that can help them build credit and secure a better financial future for themselves and their families. They want a legitimate partner in every sense of the term, not just someone who is trying to sell them something.
That's especially true during times when they may be feeling the effects of inflation. At the end of the day, we're all in this together - to help build trust and loyalty, credit unions should remind their members of that as often as possible through community building.
The key to guiding people through the impact of inflation rests in the member services that credit unions offer to their members. From helping people open accounts to giving them the tools necessary to efficiently manage all channels, credit unions should focus on building the seamless experiences people need when they need them the most.