Credit Unions Versus Big Banks

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Considering all the problems banks are having in our country at this time, you may be wondering if your fees will be increasing to make up for your banks losses. This is happening across the country, and could affect you and your accounts as the big banks are buying back bad debt and have to make this money somehow, and hiking fees are one way of doing so.

Meanwhile, credit unions were not part of the widespread crisis which banks are facing, and are now seeing more and more customers coming into their doors. Credit unions offer good rates, low risks and also personal service.
Here are some things to keep in mind, if you are one of those people now thinking of switching to a credit union for your banking needs.

Credit unions do restrict their membership, there is certain criteria that must be followed to join, such as working for a certain company, living in a certain town or county, or belonging to a particular organization. You can find a credit union near you by checking online, or by calling around to those listed in your local phone book to find one which you can join. Also be sure to find a credit union whose deposits are insured by the NCUA, which insures deposits up to $100,000, much in the same way that the FDIC insures your bank deposits. Sometimes account minimums at credit unions are only $1.

A credit union is owned by its members and is run as a nonprofit, so there are no third-party interests to worry about. Also credit unions have fewer incentives to try to talk its customers into loans which may be risky for that customer. This means that you are more likely to be able to have a discussion about not only the advantages of a particular loan, but also the disadvantages.

Since the credit unions have a lower overhead and no profit incentive, they normally offer more competitive rates. The average rate of a credit union's 4 year certificate of deposit is 3.61% or $1,524 on a $10,000 investment, versus a banks' rate of 3.31% that would give you $1,391.

Credit unions are increasing the number of services that are offered to their members, but there are fewer of them than offered by the big banks. Also the credit unions have fewer ATM's and branches than banks. Surcharges for ATM's can be avoided by choosing a credit union that belongs to the Coop network.

In the same way that banks are not the same, this also applies to credit unions, some are more bank-like than others and do have higher fees and less competitive rates. Choose a credit union the same way you choose a bank, ask your friends and neighbors if they've had any good or bad experiences, also ask the credit union personnel questions when you visit. Be sure that the one you choose is the right one for your needs.

Also consider using both a credit union for those competitive rates and a bank for those services which you need.