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Credit unions gain new potential as a place to save

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While the nation's banks and savings-and-loans anxiously await the lifting of interest rate ceilings, another segment of the financial services industry has been fully deregulated and can offer whatever interest rate it likes. So far, it seems in no hurry to take advantage.

Some 45 million Americans belong to credit unions, those private institutions best known for their automatic savings plans and low-interest loans for things such as cars, home improvements, and vacations. Until recently, credit unions were known as conservative savings programs where people made deposits every payday--usually through payroll deduction plans--and where other people, often volunteers, managed the money.

Today, however, the credit union has been given the opportunity to be a pioneer in trying new services that are likely to be trotted out in a few years by banks and thrifts.

In March, the National Credit Union Administration, which regulates all federally chartered credit unions, proposed a two-sentence rule that removed almost all restrictions on the federal credit union industry, including any ceilings they could offer on deposits. The new rule took effect April 21.

The reaction so far, say officials of credit union groups, has been fairly quiet, with a few exceptions. Most credit unions have been cautious in raising interest rates on their standard savings accounts. And while some of the unions were offering their own versions of money market mutual funds before the new rule, it now permits them to offer returns on those accounts that are fully competitive with standard money funds.

At Eastern Air Lines Credit Union, for instance, the machinery for starting a money fund was set up before April 21, says Arthur G. DeRusso, general manager of the union. Since that date, more than $11 million has come into the fund, not very large by mutual fund industry standards, but quite rapid for a new credit union account, Mr. DeRusso says.

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