ARLINGTON, Va. — While some credit unions have yet to actively promote 529 college savings plans, nearly half are offering Coverdale education savings plans.
That's one of the findings from NAFCU's August Flash Report. Only 10% of credit unions surveyed said that they offer 529 college savings programs. The median number of member accounts per credit union was 150, while the median account balance of their members' 529 educational savings accounts was $275,000. However, almost half or 48% of the credit unions offered Coverdale education savings plans.
Meanwhile, only 11% of credit unions offer Health Savings Accounts, but 69% of credit unions surveyed said they anticipate growth in HSAs over the next year. The accounts are still a relatively new savings vehicle. These accounts had an average balance of $6,450 with the highest reported balance at $17,550. The median response as to how long ago their HSA programs were launched was six months.
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Pairing HSAs with other savings accounts is a common blend for some credit unions surveyed. Of the credit unions that currently offer HSAs, 63% responded that they offer HSA regular share accounts, while 38% indicated that they offer HSA share drafts. Thirteen percent said they offer HSA share certificate accounts, while another 13% answered that they offer an IRA-like HSA account.
As the growth of spending on health care is becoming more and more of a public policy challenge, health care resources must be used more efficiently, and that should support the growth of HSAs if the proper tax incentives are allowed, according to the report. Credit unions are expected to become an important conduit in the promotion of HSAs in the future, NAFCU expects.
In other areas, the report noted that economic growth is projected to be approximately 2.8% to 3.0% over the second half of this year. Core inflation in 2006 is expected to increase to 2.8% from 2.2% last year due to a weaker dollar, wage increases, the high level of capacity utilization and commodity/energy cost pass-through effects.
The Federal Open Market Committee left the Federal Funds rate unchanged at 5.25% during the August 8 meeting. This pause, however, should not be interpreted as the end of the monetary tightening cycle, NAFCU said. The trade group still believes that the FOMC will tighten at least once more, most likely in September. While NAFCU believes the FOMC will stop at 5.5%, the risk is to the upside.
The delinquency rate increased to 0.57% of total loans in June from 0.41% in May. The slowdown in the housing market is beginning to negatively affect member financial conditions, NAFCU noted. –[email protected]
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