Rising fees and of course scandals have fueled misgivings, mistrust, and now a backlash against banks; many of us have turned to credit unions as a viable alternative to manage our savings and checking accounts, as well as loan and credit card services. According to statistics from the Credit Union National Association, or CUNA, these not-for-profit institutions gained 2 million new members last year to reach a record high of 98 million total members; assets under management have reached $1 trillion which was also a record.
According to the National Credit Union Administration there are more than 7,000 credit unions in the US that vary in size and more importantly the services they are capable of offering. While there are plenty of very good perks to joining a credit union you still need to be a wise shopper.
Credit unions are non-profit cooperatives owned by their members, their mission is to provide their members with affordable financial services…This is a departure from the traditional banking industry where the mission is to transfer profits to stock holders. Some say the difference in missions is the reason for much higher satisfaction ratings for credit unions over banks. The American Customer Satisfaction Index makes available the studies that compare banks and credit unions.
Below are points you might want to consider when you are trying to determine if you want to stay with your bank or move your money to a credit union.
Lower Rates On Loans at Credit Unions
According to the National Credit Union Administration (CUNA), as of June 28th of this past year the average rate on a 36-month car loan was 2.85% at credit unions and 5.59% at banks (This is a comparison that you need to do locally.).
Higher Rates On Savings At Credit Unions
The rate differences on savings aren’t as great. But interest rates on 10 different types of accounts, from checking to five-year certificates of deposit, are higher on average at credit unions than banks, again as a shopper you need to do this comparison at your local bank and credit unions.
Better Credit Card Deals At Credit Unions
According to the NCUA, the average credit card interest rate in June of this past year was 12.85% for bank-issued cards, compared with an average of 11.56% for cards issued by credit unions. In addition, credit unions credit cards tend to have lower fees and fewer of them. Again as a shopper this comparison needs to be done locally.
Easier to Borrow At a Credit Union
While no lending institution is going to be careless with loans, community-based credit unions tend to be easier to deal with than megabanks. Lending decisions are more likely to be made locally with more flexibility. In addition, while few national banks would make what’s called a “signature loan” which is an unsecured loan guaranteed only by your signature. Credit unions typically offer this service to their members with good credit.
Ease of Accessing Service at Credit Unions
Big banks advertise the convenience of accessing ATM’s or the branch that is just around the corner. Credit unions have countered by joining forces to offer their members the same easy cash access with the CO-OP ATM network and a shared branch alliance. The CO-OP ATM network includes almost 30,000 cash machines, and shared branching gives members the ability to conduct in-person transactions at nearly 4,700 branches around the country. Credit unions have also made huge strides in online banking.
Lower Fees at Credit Unions
When it comes to banking fees, you’ll probably find better deals at credit unions than at the giant commercial banks. Whether you’re comparing fees to maintain a checking account, foreign ATM fees, or penalty fees for overdrawing your account, they’ll probably be lower. You should be able to get this information from both your local bank branch and credit union.
Safety for Deposits in Both Banks and Credit Unions
Credit unions offer the same deposit guarantee offered by banks with protection for deposits up to $250,000. They’re not FDIC-insured. Instead, they have their own insurance fund.
How Do You Join
In days past, to join a credit union, you had to work at a specific company, or be a member of a specific organization or profession. Current law still requires credit unions to have a defined group of members, but that group can be pretty broad. For example, of the approximately 8,000 credit unions nationwide, about 25% are community based. In other words, to qualify as a member, you only need to live in the same city or county as the credit union. Barriers to membership at a credit union are about as high as the ones you’ll find at your neighborhood warehouse store.