With their people-helping-people ethos, credit unions are becoming the financial institution of choice for Kiwis fed up with high bank fees, reports Patrick O'Sullivan
At the age of 44, Hawke's Bay Hospital cleaner Elizabeth Smith can finally fulfil her lifelong dream of travelling overseas.
"I've never been out of the country and don't even own a passport," she says.
"I've been saddled with debt and unable to save, but now I'm on my way to realising my dream of flying on a big aeroplane."
She has paid off old debt, sorted her finances and is more financially literate, thanks to Credit Union Bay Health (CUBH).
The credit union has gone through several name changes since it started 30 years ago. It began as the Hawke's Bay Hospital Staff Credit Union, then became The Hawke's Bay Health and Related Services Credit Union, but its benevolent operating principles haven't changed.
Smith moved to CUBH, now open to any health-industry employee, six years ago after becoming upset by high bank charges.
"The fees were killing me - they were about $60-$70 per month for phone banking and all that."
She says it was a move that quickly paid off.
"It has helped me out a lot - it has really helped me get back on top of things."
Another reason for her dislike of regular banks was because they had "too much criteria", even though she has a good work history. Her credit union had no problem helping her consolidate her high-interest debts.
Smith says she likes that her credit union is not Australian-owned, unlike most New Zealand banks. "Credit unions are owned by the people who use them."
Realising the benefits to its staff, the hospital allowed CUBH to build its own office on hospital grounds.
CUBH managing director Murray Loader says it was in a healthy state with 1800 members and is looking to expand beyond Hawke's Bay.
He says there are no plans for CUBH to be the next credit union to be assimilated by NZCU Baywide, the largest credit union in the country with 30,000 members across 15 branches in the lower North Island and open membership.
The New Zealand Association of Credit Unions is the umbrella organisation for 21 of New Zealand's credit unions. Collectively, credit unions rank among the country's largest financial service providers (by financial transactions), with one of the largest ATM networks in the country, outside of major banks.
Chief executive Henry Lynch says Kiwis are increasingly being attracted to credit unions.
"Many people still fall victim to ruthless loan sharks because they believe their credit history makes them ineligible for loans," he says. "With our People Helping People philosophy credit unions are a safe, viable alternative for communities."
All profits are returned to members through fairer fees, good customer service and better interest rates.
Unfortunately, the smaller credit unions have proven vulnerable. The Hibernian Credit Union in Wellington is being forced into liquidation after an employee stole $1.2 million over seven years. Its 458 members face losing more than half of their deposits.
Lynch is quick to point out they were not part of his national association. "We have checks and balances in place to detect irregularities. Every month our credit unions report their accounts, which are then assessed by our trustee."
He says New Zealand credit unions are enjoying a big boost in new members because of the internet Facebook campaign Bank Transfer Day which finished on Saturday.
The campaign encouraged people to move from banks to non-profit credit unions. It was started by Los Angeles woman, 27-year-old Kristen Christian, who says she was sick of paying high bank fees.
Bank Transfer Day was in a similar vein to the Occupy Wall Street movement, with protesters setting up camp in a New York park, sparking similar demonstrations globally.
Smith says favourable banking terms are even more important for people who are on limited incomes and is persuading others to follow her lead - while trying to decide where she will holiday next year.
"I have talked a few of my workmates into it. We are not rich people - it's not a great wage - but it keeps you afloat."