I currently use a bank for my checking and savings. I’ve looked a some of the credit unions in my area. Less fees, better interest rates. Am I missing something? Is there a reason I shouldn’t move to a credit union?
It depends on your jurisdiction and your size/status (e.g. a “professional investor” may be treated differently), but banks are typically more tightly regulated and often subject to governmental protections for their depositors that aren’t extended to credit unions.
More information available if you turn out to be somewhere I know the rules for.
Well, I’ve found credit unions to be better than banks when it comes to customer service and fees, but I’d be interested in what the tighter regulations are - in my case, the location is New Mexico.
Which rules me out from telling you because I don’t know it. Where I am (New South Wales) there are a number of prudential restrictions on banks that other financial institutions don’t have to face (e.g. a requirement to keep a larger proportion of liquid assets, stricter lending criteria, etc.). They’re also not required to be mutual organisations, which Credit Unions are, so you don’t have to own shares of the bank in order to deposit with them.
As a result, they also have privileges not available to other institutions - Reserve Bank access, access to the payment system, etc.
oh, and for what it is worth - I’ve had two mortgages and two car loans with my CU, and they kept and serviced the loans in house. I’ve never had to send a check off to a third party on any loan - the credit union takes all the payments with direct deposit. They maintain the escrow for taxes and insurance also. That’s always made things easy for me.
And the rates were a bit better than I would get from a bank.
Ok, different countries. Wouldn’t expect things to be the same.
Thanks.
I also save with a credit union and have one running my access account, but my mortgage rates were significantly cheaper from a bank than a CU.
Yes. The corporate executives need their bank to meet Wall St. analyst’s expectations for revenue and customer churn, and they need your help getting there.
For the past 30 years my mother has worked various jobs at a multi-branch bank here in Michigan. Last week I asked her this same question. Her response:
“A few years ago I would have told you your money was safer in a bank. Now, there is absolutely no reason to not use a credit union unless you travel a lot and feel the need for a bank with branches everywhere you go”
A few years ago credit unions had essentially the same insurance for deposits as banks did. I can’t imagine why she’d think that one’s money would be safer in a bank unless they had more than $100,000.
ETA: They still have essentially the same insurance today. http://www.ncua.gov/news/press_releases/2009/MR09-0526.htm
My first job in high school was as a student-intern-clerk in the teacher’s credit union, so I’m a fan of credit unions. That said:
Time was that you needed to fit into the specific membership criteria (being a school district employee, for example) before you could join any given credit union. I’m not sure this is so much the case any more; seems like several will accept pretty much anyone for ‘membership.’
The distinction is probably still that since credit unions are smaller, they may not everyone of them be able to provide all the services you’d expect from an ordinary bank. Most credit unions nowadays probably provide some kind of checking account service for members, but there may be some around that just have savings accounts available. Hey, checking accounts cost money to operate; some credit unions - with enough approval by the membership - could figure that skipping them just leaves more money available for savings account dividends.
Some credit unions will finance real estate mortgages, others not. Some will offer certificate of deposit accounts, others not.
Make sure that the credit union you’re interested in has the services that you’re going to want. That’s the worst shortcoming I know for credit unions.
I understand that once you’ve been with a credit union for a while, they may be more willing to extend credit for a home or auto purchase than a bank?
I’m in my mid-30’s. I make $45,000 per year. My credit right now is blank. The last time I did anything on credit was a credit card I had over 10 years ago. So i have the issue of “can’t get credit because you don’t have credit.” So a friend suggested moving to a Credit Union and in a year or so they may be more willing than a bank to work with me on something.
As far as services i’m interested in, yeah, they seem to. Checking,Savings, CD’s, mortgages, credit card. I can’t think of any other services I would be likely to need.
I believe you will find it more difficult to find credit at a credit union, relatively speaking, because of the tighter standards they must adhere to when it comes to making loans. Perhaps a credit card or something, certainly not a home mortgage.
There’s a very, very good reason that we are not hearing about credit union failures in the news on a weekly basis, and it’s because they don’t make (as many) bad loans (as banks).
I am a member lf quite a few Credit Unions. The one in my state gave me a loan when other’s would not. They limit their members to a small geographical area. Their ATM network is huge though. The last time I set foot in a branch was to sign a used car loan at 2.99 % When I need to deposit a check I just mail it to them.
The other C.U. I use mostly is http://www.alliantcreditunion.org/ Their membership is also limited but not by geography but by who your employer is you can get a list at http://www.alliantcreditunion.org/membership/eligibility/organizations/
If you can’t find a way on that list, a $10.00 donation to Orphan Foundation of America will also gain you the opportunity to open an account. You may be wondering why someone would want to jump through such hoops for an account? Well I’ll tell you in two words edeposit plus
From the comfort of my own home I can deposit a check by scanning it. I don’t have to mail the check in to anyone. I have my money right away and after 90 days I shred the check. I can access my money by writing a check on the account, transferring to another bank or C.U. or using an ATM/Debit card. Currently they are offering 1.50 % on savings and qualified checking accounts.
That’s kinda what I had in mind for now. I’m not looking for a mortgage (yet). Since I have a blank credit history, I can’t even get a gas card. I need to start building a history.
Quintas, many of the larger credit unions, such as Navy Federal and USAA permit family members of otherwise qualified members to establish accounts. I did this for my daughter. The great thing is that the above mentioned CUs have worldwide presence. I transfer funds and make purchases wherever I am.
If you deposit a sizeable amount, you can immediately take a “secured” loan up to a percentage of the deposit, as well.
Off topic but if this is the case, apply for a JC Penny or gasoline credit card. You’ll get it and then charge a few things and pay them off then make a major purchase, ($500) and pay it off over 3 months. Then you’ll start seeing the credit offers come in. Read them as some will be high rates
I saw this and got my old business admin book out. This is what it had to say about CONS for credit unions this was from 1992
[ul]
[li]Few ATMS[/li][li]Not all are insured[/li][li]Don’t return cancelled checks[/li][li]Limited auxiliary services (coin counting, travellers checks etc)[/li][li]Limited hours[/li][/ul]
As you can see that was nearly 20 years ago and few (if any) of those knock backs still matter.
Depending on the credit union, it may be easier to get a low-limit credit card through them instead of through a bank. Credit unions make decisions at a local level and you can often talk to a human being who can make a decision.
I don’t know about “everywhere”, but many (most?) credit unions are part of the co-op network. I’m still a member of a credit union based in California, but I can use my ATM card at local credit unions here in Michigan through the co-op network without fees. That includes depositing checks and withdrawing cash. (There may be a per-month limit, but I’ve never hit it.)
You can go to the “locators” tab and look for ATMs near you.
When I first started online banking, you needed the size of a big bank (there are 5 “big banks” in Canada) for them to sign up all the organiznations - phone companies, cable, even the city water bill. Not sure if the Credit Unions can provide the same service nowadays, but I imagine they can.
Someone told me I should move to a credit union because like most co-ops, they give you a dividend based on the level of business revenue you provide. Is this true?
I currently deal with the TD Bank. A while ago they unilaterally raised my House Equity Line of Credit from Prime to Prime plus 1. I will be moving somewhere else shortly just on principle.