St. Martinís CREDIT UNION in the Twin Towns of CAYO WEST
By Ray Auxillou
St. Martinís Credit Union of the twin towns of Cayo West is doing well. The big news is by the end of this year, their capital is expected to break the $10 million dollar ceiling.
Some people scoff at Credit Unions, as they are started by small people with little money, to pool their fiscal resources to lend to each other. Unlike Commercial Banks, Credit Unions do not require real estate assets, or other security for loans. All Credit Union loans are called CHARACTER loans and approved by your peers in a Loans Committee. By character, they mean, can you prove to them, that you can SAVE a little bit each week, or month? If you can develop a SAVING habit, then you will also be able to pay a loan.
There are useful things about Credit Unions. Those that have a checking account facility do not charge for a checking account. Commercial banks charge to have a checking account and also load it with other miscellaneous service fees, which increase their income at your expense. Some Credit Unions only have savings accounts. All banks and credit unions make their money by lending the pooled money resources. Credit unions have a fixed loan interest rate based on 12% simple interest. Commercial banks charge more loan interest than credit unions and they make it a compound interest, which is far more expensive, as you end up paying interest on your interest. They also can calculate daily, which gets more expensive than a simple interest Credit Union loan.
St. Martinís Credit Union is a member of CUNA, the international Credit Union body. Through CUNA comes many other benefits, like specialized money insurance schemes. St. Martinís Credit Union in the twin towns of Cayo West for instance has your LOANS insured up to $40,000. If you die, your loan is paid off by life insurance. This is an automatic feature, no extra payments on your part. My credit union in Miami, Florida has our account savings insured for a $100,000 USA through something else called the FDIC. At St. Martin Credit Union, your savings are for small people and only go up to insurance of $8000. Thatís because this credit union serves small farmers, salaried workers and agriculture and small business people. Nobody can really live independently and raise a family comfortably on the low salaries in Belize, so some business venture as a sideline, or even several business ventures are necessary for young families to get ahead and pay their bills. Borrowing for such small business ventures from your local Credit Union is the best borrowing deal around.
If you borrow money, up to $40,000 from St. Martins for a mortgage for instance, if you die, the land and house would be paid off by this insurance up to $40,000. The children or other heirs would receive clear title after probate of your estate. Some DFC housing scheme house and lots also have this proviso, and heirs of their parents that died, got their LEASE certificates free and clear from DFC. Though will still have to pay Lands Department transfer costs..
After 70 years of age, all St. Martinís Credit Union customer insurances are canceled however. The Credit Union system does not insure old peopleís money. If you died by accident for instance, the beneficiary of your account would get double your savings deposited from the umbrella CUNA MUTUAL insurance scheme.
If you are old and have saved, or sold your house, business, or farm and plan to live off your interest on your savings. Then the Credit Union is not for you. Dividends for St. Martinís Credit Union for instance for 2006 were only 5%. Whereas most commercial banks are paying over 8% interest on your larger savings capital. 3% or more is a lot of difference in a commercial bank Certificate of Deposit.
What the Credit Union excels at; is lending money for anything you want, without security, just your reputation and character and preferably some demonstration that you are honest and always eventually pay off your loans. Your Credit Union loan is usually cheaper than a commercial bank loan as well.
In comparison, a credit card will charge you about 18% interest on your credit card borrowing. But since it is compound interest and they have a flurry of extra fees, service charges and anything else they can think of, to trick you out of your money, such as changing the end of month free usage date, to the 8th, instead of the 31 st. or some such trickery, your credit card loan cost usually runs between 34% and 49%. ATM cards which are touted for convenience have usage fees. The trick with bank ATM cards, are that if the amount the ATM card is good for, is very low, then the fee you pay to use it escalates into astronomical amounts calculated on an annual basis. If you have a $100 limit card and pay a $2 usage fee, you are paying 2% for a short transaction of a week or two, which on an annual basis becomes defacto 24% interest over twelve months. If you have a $500 ATM card limit, then the same $2 fee to use it, would cost you, if you used the whole limit at one time inside of a month, the cost would be much less. The difference is less on a $500 bigger limit of an ATM card and the interest is lower. ATM cards are about paying to use your own money for the convenience of 24 hours service from a machine and sometimes is cheaper than buying gasoline to go to the bank on a weekday.
The best bet is to get money through a Credit Union, and out Western Cayo, St. Martinís Credit Union is the big name in the twin towns. If you borrow big and then can budget carefully for your living costs, it is the cheapest borrowing money around. You borrow one time, then budget yourself on how you spend it. Learning to budget your living costs weekly is the name of the game to get ahead and being able to SAVE.
Commercial Banks have a deal where you get approved for a big loan for some project, and they will allow you drawing privileges. You only pay interest on what you use, when you use it. The alternative is a Credit Union loan and you budget carefully.
SAVING and BUDGETING your expenses are the name of the game if you want to wisely use Credit Union loans to put your family ahead more quickly. Never borrow more than you can pay. Here it pays to calculate what you can pay, by budgeting 20% of your income from salary, or business estimate on a weekly basis for payback. This will give you the amount you can RISK to borrow in a loan. No loan should be so big it canít be paid off in less than six months. There are always NEW reasons why a family needs more money and quickly. Keep your loans small and manageable, make them for short term goals, rather than gamble too big and borrow too much and you will get ahead in smaller safer increments.
The success of St. Martin's Credit Union is based on an expanding local economy based on a population growth of 6% a year. Business in Cayo West is good, though business competition keeps pace with demand and cycles of supply and demand tend to get whittled down to a smaller market share in quick order through more competitors. Tourism is recovering after a drought of five years or so and seems to be expanding as new hotels and guest houses continue to sprout up all over the place, construction in general continues to maintain a steady growth pace. There are days you cannot get building materials, the demand is so high. the national export brain drain is over. College graduates have job offers to choose from and educational policy changes are paying off. Belizeans are returning home to capitalize on the boom occuring.
A total of 2,730 loans were approved during the past year for almost $5 million dollars. The biggest loan portfolio were "construction" loans, at over a million dollars. There are babies everywhere as the population expands. Vehicle repair loans because of bad roads came to $738,800 dollars. If the government ever asphalt paves the streets and roads, this loan portfolio will shrink. This is unlikely to happen though, as the future revenues for the next 30 years or so is being spent right now by the PUP on some sort of leveraged borrowing spending policy. Membership of St. Martin's Credit Union is now 4,562 persons. Income before expenses for the past year was $877,299 dollars. Expenses run about 2/3 rds of that. Salaries have been raised for staff and perks approved. St. Martin's Credit Union in the twin towns is now a dynamic institution contributing to the growth of life in Cayo West.