7 Reasons You Should Join a Credit Union This Week

By on

Two weeks ago, President Barak Obama appointed Harvard Law Professor Elizabeth Warren to the brand-new post of U.S. Consumer Protection Adviser. Last week, Warren gave her first speech – at a meeting of the National Association of Federal Credit Unions in Washington, DC.

Warren grabbed national headlines for railing against big banks – “The whole financial services area has gotten badly out of whack” – but she also spoke kindly about an often-forgotten alternative to big banks. Namely, credit unions.

“I think that consumers and credit unions should be on the same side of the line,” said Warren, who added that she’ s a “long-time member” of a credit union herself, along with nearly 92 million other Americans.

Warren’s not alone in her praise of credit unions – I’ve been urging viewers to join one since I started doing TV news 20 years ago. As I mention in my latest effort above, if you’re not a member of a credit union now, there are at least five reasons you should join one ASAP.

Lower rates on loans

Way lower, according to DataTrac, a national interest rate-tracking service – an average 1.5 to 2.0 percentage points lower than comparable loans from banks. See the details from this comparison [PDF].

Higher rates on savings

I refer you to the study mentioned above, which shows savings rates higher by .2 to 1.0 percentage points on various types of savings accounts.

Better credit card deals

Buried in a 36-page report from the Pew Health Group from last October [PDF] is this gem: “In general, the largest credit unions offered lower rates than did the largest banks. In July 2009, median advertised purchase rates were between 9.90 and 13.75 percent on surveyed credit union cards, approximately 20 percent lower than comparable bank rates.”

In addition, credit union credit cards tend to have lower credit card fees and fewer of them.

Easier to borrow

Says Fred R. Becker, Jr., president and CEO of the aforementioned National Association of Federal Credit Unions: “While banks were tightening their commercial lending, credit unions member business loans have increased nearly 17 percent since September 2008. In fact, through the third quarter of 2009, credit unions provided over 139,000 loans, for a total of nearly $28 billion to their members.”

In addition, while few national banks would make what’s called a “signature loan” – an unsecured loan guaranteed only by your signature – credit unions routinely offer this service to their members with good credit.

Convenience

You’d think that a small credit union without a million branches would be less convenient than a giant national bank. Not necessarily. Credit Unions have gone a long way toward making their online, phone, and in-person services as easy as possible. Many credit unions belong to a shared branching network that allows members of one credit union to conduct business at any other member credit union anywhere in the country – even overseas. And when it comes to finding the nearest participating credit union? Yes, there’s an app for that.

Lower fees

When it comes to banking fees, you’ll probably find better deals at credit unions than the giant commercial banks. Whether it’s fees to maintain a checking account, foreign ATM fees, or penalty fees for overdrawing your account, they’ll probably be lower.

Human beings answer the phone

I went to the same national bank branch for nearly 10 years, and the people there were wonderful – I’d never suggest that any one business automatically beats another when it comes to friendly employees. That being said, however, on those rare occasions when I needed to call my bank’s national customer service number to get a problem resolved – well, I probably don’t have to say more. Credit unions are typically smaller – should you have a problem, odds are much greater that you’ll be talking to live person much sooner.

How do you join?

So now that you’re convinced, how to do you join a credit union? In days past, you had to work at a specific company, or be a member of a specific organization or profession. And laws still require credit unions to have a defined group of members – but that defined group can be pretty broad. For example, of the approximately 8,000 credit unions nationwide, about 25 percent 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. In fact, you might not even need to actually live in the area – working there or going to school there might be enough – even being related to another member could qualify you. In short, barriers to membership at some credit unions are about as high as the ones you’ll find at your neighborhood warehouse store.

You can search credit unions at a number of sites, including Find A Credit Union, CU Lookup and at the Credit Union National Association site.

And if you’re worried about the hassle of changing from your bank to a credit union, check out this story: Hate Your Bank? 3 Steps to Ditch Em.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,207 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Anonymous

    I have been a member of a local credit union for over 10 years. I have both a checking and a savings account with them. I financed a vehicle which was paid off in 3 yrs (got a great apr!) To the average big bank customer, your article would be the blessing! As a credit union “member” I feel that I must disagaree with one part: “EASIER TO BORROW.” I calculated what I was paying on individual credit card payments and figured that paying off a loan at my local credit union would be a better bet. So I applied for a 6,000 loan. All accounts are in good standing. My paycheck is deposited directly to the credit union each month. I had paid my car loan off years before (automatic withdrawal)…I was a “member” not just a customer…no problem, right? Sadly, I was given the “it’s not us…it’s the entire banking industry” speech. My loan was denied. Even though I am employed by the school district that is directly associated with the credit union. Even though I had informed the loan officer that I planned to make payments of $500 a month. (Yes, this payment was going to be automatically withdrawn from my paycheck…which, if you recall, is deposited directly to them each month!) VERY DISAPPOINTED with my credit union that day.
    I did go to a “big bank” and got my loan at a very comparable rate. I am currently shopping for a new vehicle but WILL NOT be stopping by my local credit union. NAFT Federal Credit Union didn’t want to see the “individual” behind the application. The individual that is currently taking their business elsewhere.

  • http://twitter.com/kasasa Kasasa

    This is a great list of reasons Stacy. Thanks for compiling. What are you guys doing for International Credit Union Day on the 21st? We’ll be sure to look you up!