For the first time in U.S. history, a major credit rating agency has downgraded the nation’s credit rating.  Whether warranted or not, this unprecedented move might affect consumers over time.  Rick Higgins, VP Lending for Coosa Pines FCU, said that only time will tell if any of the potential effects will actually happen, but "The economy has taken a hit by the downgrade, there is no question about that."

Observers usually expect that lower credit ratings will lead to higher interest rates for bonds; if there’s even a slightly higher chance of default, buyers get paid more to take on the added risk.  Then, because of higher interest on Treasury bonds, the rates that consumers pay for home and auto loans, which are keyed to Treasury’s, could rise.  That change could lead to higher prices -- inflation -- on other consumer goods, if things don’t get better.

Ironically, because of heightened concern in the market, recent demand for Treasury bonds has been so strong that their interest rates actually have dropped rather than risen.  This reflects the fact that Treasury bonds still are considered among the safest and most liquid investments in the world; so even if the cost of borrowing goes up, most financial observers don’t expect big increases.

The good news for you is that, as a credit union member, you will continue to have access to the best borrowing rates.  That won’t change, because Coosa Pines FCU simply works on a different model than a consumer bank.  At a bank, owned by a few stockholders, business decisions are driven by a need to pay those stockholders dividends.  At a credit union, owned by members, those dividends come to you directly in lower borrowing rates or slightly higher savings yields, or indirectly through better services and reduced fees.

"Mortgage rates will remain low, maybe even drop lower," Mr. Higgins said earlier this month, adding that the credit union wants to make loans and will look for opportunities to make loans for members when possible.  Indeed, CPFCU mortgage rates have dropped -- as have auto loan rates.

No matter what happens, rest assured that at Coosa Pines we are committed to helping our members weather this economy -- and your own personal financial challenges -- in the best shape possible.  The credit union is as healthy as our members, so we want to see you thrive!  See us today to talk about your concerns; we can set your mind at ease.

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