Credit Unions Report a Record-Setting Plunge in Savings Balances

Source: American Banker

Credit unions saw savings account balances plunge in March, as members withdrew funds to cover daily needs and to search for higher yields.

The average credit union member had $13,818 in total savings deposits in March 2023, down from $14,104 in March 2022. The $286 year-over-year drop is the biggest in credit union history, according to a new report from TruStage (formerly CUNA Mutual Group), an insurance and financial services company that monitors the credit union industry.

The company said the dip was due to partly to middle-income members withdrawing savings to spend on hotels, airfares and restaurants now that the COVID-19 pandemic is coming to an end. 

At the same time, some high-income members are withdrawing deposits in search of higher yields. 

"This disintermediation of deposits is a big concern for credit unions and the economy in general, as falling deposits could lead to a credit contraction and slower economic growth," said Steve Rick, chief economist for TruStage.