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.
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.
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.
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.