Cobalt Credit Union Idiocy
Bad Economic Policies
The invention of the debit card has vastly expanded consumer spending. Unfortunately, it gave access to people who have very little understanding of savings and credit, let alone financing. There are people who think the only purpose of money is to spend it. Such people are serfs.
There are those who make good use of finance but end up doing bad financing. Paying off a car which was totaled two years ago is stupid, but there are people making such car payments today. They failed to understand the purpose of wealth and how to manage it. Save the money to own the car, and you will take better care of it and if it is totaled, an insurance company writes you a check! Sometimes leasing is better and let the owners take care of the car.
Enters Cobalt Credit Union, which took over Creighton Federal Credit Union due to mismanagement of funds ( https://chipfilson.com/2024/09/where-did-creighton-fcus-members-13-million-go/). Members of neither Union were allowed to vote on the matter, and Cobalt has not surveyed or consulted with former Creighton members regarding services or at least not to the extent they should. Many people are grumbling because Cobalt has a scam going on.
First, to have a regular interest-bearing account at Cobalt, you have to regularly use their debit card. You may think, so what? But debit card users have extremely bad habits. They frequently do not consider transaction times, do not take into account how much funds they have, or the fact that merchants make mistakes and can overcharge your debit card. Fraud is easy and devastating with debit cards. Creighton Federal Credit Union found this out the hard way.
Also, using a debit card when travelling, such as on airplanes and hotels, could get you stranded with no access to your funds. In addition, you do not build a credit rating with a debit card. The result can be a vast number of overdrafts which the credit union will charge the user, which means Cobalt is clawing back funds for paying out interests.
Instead, Cobalt should provide interest bearing on accounts when members keep their money at a certain affordable level (such as $1,000). Perhaps due to low interest rates, Cobalt wants to pay out as little as possible in interest, but the current policies are not building wealth in the Credit Union, but depleting it as members have no incentive to keep money in the accounts.
Credit cards are vastly superior in avoiding all these problem. You can dispute a charge. It is more forgiving of clerical errors caused by merchants. You don’t need money in your bank account for a large charge. You get a list of every place you used your card, whereas on debit, do you really know what the $25 withdrawal was used for?With a credit card, you build credit history, giving you greater access to finance options. And, if you pay the credit card off monthly, it can pay you back with cash! Yes, Cobalt does offer a cash back credit card, but it is totally disconnected from what type of Cobalt account you have. Oddly enough, a lot of the Cobalt employees are unaware this credit card exists. And, there are other problems.
Given what happened to Creighton Federal Credit Union, you would think Cobalt would encourage their members to save money and invest in the credit union, but it seems to be weak and lacking. Perhaps Cobalt is unaware of the competion. To obtain a bank certificate of deposit, known as a CD, you need to invest $1,000 in Cobalt. You may as put your money in Omaha First National Bank for just $500. Meanwhile, Chase banking is playing hardball in bribing people to move to their money to them.
This is not to trash the Cobalt Credit Union. They can do basic banking, because basically that is their only strong trait. They seem to have forgotten what the word “credit” means in credit union. Debit cards are not credit.