USA Federal Credit Union, which provides car loans, mortgages, credit cards and home equity, has announced that it will merge with Navy Federal Credit Union in order to stay afloat.
The company has struggled mightily during the recession, losing $45.1 million over the past three years, according to San Diego Business Journal. The once-profitable credit union faced a wave of defaults on its various offerings, and with only a small amount of capital on hand, was faced with an uncertain future.
Credit unions are cooperative institutions that look to minimize rates for their customers rather than maximize profits. Yet USA Fed was a possible victim of this strategy – not saving enough of its meager profits to hold off the tough times of an economic collapse.
Navy Federal, meanwhile, is the largest credit union in the world, making loans to Department of Defense employees and their families. With $41 billion in assets, the company has more than enough to keep lending well into the future. The company has said that it will keep all of USA’s branches open and employees working.
A credit union might be a good option for those looking for a car loan, as these institutions can often provide competitive rates.