Only 1 in 10 credit unions is financially strong

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If you’re thinking of ditching your bank for the perceived financial stability of a credit union, you may want to think again.

Nearly one-third of the nation’s 7,391 credit unions are financially weak, while only one in 10 are strong, according to an analysis by Weiss Ratings in Jupiter, Fla.

The firm assigns financial safety ratings based on its analysis of publicly available data. Weiss, which has analyzed banks for many years, launched its credit-union ratings in March.

Only 736 credit unions were found to be strong –- meaning a grade of B+ or better –- and only 372 got A’s, according to Weiss.

“Many of the nation’s credit unions are feeling the effects of the slow economic recovery, combined with the continuing fallout from subprime lending and the nation’s weak housing market,” said Gene Kirsch, a bank analyst at Weiss.

That doesn’t mean customers would lose money in a failed credit union. Deposits in federal credit unions are insured up to $250,000 by the National Credit Union Share Insurance Fund, which is backed by the U.S. government.

Ratings of individual credit unions can be found here: weissratings.com/creditunionlists. Registration is required, but it’s free.

--Walter Hamilton