12 Great Reasons to Drop Your Bank and Join a Credit Union

Credit unions are no longer exclusive clubs. Now, just about anyone can join. They are attracting more members looking for ways to save money on banking and borrowing.

2. More-personal relationships

When phoning your national bank to inquire about a product or service, it may be hard to find someone empowered to make a decision or answer a difficult question. You’re likely to reach a call center and be politely shuffled from one customer service representative to the next.

Money Talks News’ Allison Martin, in 9 Reasons to Love Credit Unions (and Not Big Banks), tells why she prefers a credit union:

The credit unions I’ve joined have been staffed by friendly representatives who knew me by name. I can’t say I’ve had that experience with banks.

3. Expanding membership options

Credit union membership used to be available only to people who worked at certain companies, schools or government institutions. Today, joining is much easier. Many credit unions base eligibility simply on where you live. Credit union membership is growing by about 2 percent a year, says The Washington Post.

4. Higher rates on insured savings

American credit unions are not-for-profit organizations. That means their focus can be serving members rather than making profits. Also, they are exempt from paying federal taxes. These factors can let them pay higher interest on deposits.

“Many credit unions pay ‘bonus’ dividends if the credit union has a good year,” according to The San Marcos Daily Record.

Writes The Motley Fool:

The average credit union offers CD, money market, and savings rates well above the national average for banking rates. The disparity is most dramatic for longer-term savings vehicles such as certificates of deposit, where credit unions pay nearly 50 percent more on five-year CDs than banks.

Compare rates for CDs, interest checking accounts and money market accounts at Money Talks News’ solutions center.

5. Cheaper rates on some types of loans

Credit-union car loan rates can be head and shoulders above banks’. MyCreditUnion.gov, a site of the National Credit Union Administration, quotes from SNL Financial, a banking and business analytics company that analyzed credit union competitiveness in 2014:

SNL Financial found the difference between banks and credit unions was greatest in car-loan interest rates. The average 36-month used-car loan interest rate offered by credit unions was 2.71 percent compared to 5.26 percent for banks. For new-car loans, credit unions offered an average interest rate for 48 months of 2.64 percent compared to 4.78 percent for banks.

The Wall Street Journal wrote recently about car loans:

The average interest rate at such (credit union) lenders on three-year new-car loans was 2.51 percent as of Dec. 30, (2014) compared with 4.68 percent at banks, according to SNL Financial, a financial-information firm based in Charlottesville, Va. At Navy Federal Credit Union, the largest credit union in the U.S. by assets, the fixed interest rate for a new-car loan of up to three years is as low as 1.49 percent.

For mortgages, credit union rates can be comparable with other lenders though not often stellar. However, The Washington Post says, home equity lines are a standout offering, with credit unions charging an average 4.01 percent vs. 5.73 percent by banks.

Comments

1,051 Active Deals

More Deals