See subject. Thanks. Friend was praising Amalgamated to the skies.
A credit union is a co-operative bank, owned by its customers instead of outside investors. It provides the same services as a bank, but does not necessarily have to provide returns to investors, and so may have lower overall costs and can charge lower fees. It is also theoretically more responsive to the needs of the customers.
I use a credit union. Its advantages for me are:
free checking with interest, no minimum balance
free use of the credit union’s ATM
free debit card
free online banking
teller hours are 9-5, M-F. Local bank hours are 9-4(!!??)
Banks really suck in comparison around here.
I switched to a credit union several years ago–I got tired of my Big Bank charging me $30 for some incomprehensible reason or other, multiple times a month.
Some other advantages (for my credit union):
–5% interest on the first $500 of savings. It’s not huge, but it’s something, better than any big bank.
–Can use ATMs without fee in any 7-11, which really extends the network.
–Very easy to deal with on loans. I have two car loans with my CU, and both time I negotiated them DOWN on the (already-low) rate.
–They occasionally give incentives for “greener” vehicle loans by shaving a quarter point off the interest rate.
–When I do have one of those fee-incurring events, like overdrafting my checking, the fee is $3.
–In the LA area, lots of the credit unions do “shared banking,” meaning you can make deposits or withdrawals without fee or hassle at many more branches. This and the 7-11 make the whole thing much more competitive with the big banks, because of the convenience. Depending where you live your options may be more limited.
PS, deposits are insured by the federal government, just as with a bank. Don’t know what the upper limit is.
So why don’t people flock to them? She’s the first person I’ve met who uses one.
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Today’s my birthday. I need to tell as many people as I can.
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While I’m a member of a credit union, that’s not relevant to your question.
What is relevant is that Credit Unions used to be restricted in membership to a group or pool of people (and many still are), say people who worked for a given large employer, or were member of a Labor Union, or worked in a given field, etc.. So, for example, for a Federal Educators CU you had to be in the education field (or be related to someone who was in the field) - not just anyone could join them. There are now geographically-restricted CU, so people who live in a given area can join those (like I did).
If your area doesn’t have such a CU, and you don’t belong to any group eligible for the CUs in your area, you’re pretty much out of luck.
From wiki:
I’m a Regional Credit Union member, and it is much, much better than a back.
Great car loan rate. 1.75%. Got that in 2008. I’m fully paid off, now.
Plenty of people use them, because plenty of people find them better than banks, for the reasons that have been outlined.
They have some disadvantages too, though. I don’t use them because the ones I am eligible to join don’t have any convenient locations. I like having my accounts in a big bank with ATMs all over the country. I travel a lot and it’s nice that in any city in the US there’s always an ATM for my bank nearby.
Happy birthday Leo
We’ve found that as our finances get more complex, we have had to move from a CR that we loved, to a big bank that we tolerate. When we only needed saving, checking and a lock box, the CR was fine. Once we started adding mortgages, retirement funds and investment saving, it made more sense to move to a big bank that offers it all.
Actually, …
Same at Wells Fargo plus they have Saturday hours and a huge network of free ATMs.
I’ve been happy with my credit union for the last 10 years or so, during that time they’ve also been able to start offering mortgages and retirement accounts. Also a Money Market Fund for investments. So it varies with the one you’re at. All I have left elsewhere is my mortgage and I’m considering refinancing that through my CU. One note of pride, my CU received no bailout money during the big meltdown a few years ago, probably because they are much more conservative about loaning money out to marginal risks.
You must think Wells Fargo’s everywhere, Laggard.
Only 9000 locations in 40 states. My larger point was that the things someone mentioned as being a benefit of banking at a credit union are things that are not unique to credit unions.
Banks can be set up on the cooperative model, too, though lately most have converted to the corporate model, because it means more money for management.
A credit union is formed under different regulations than banks. There are multiple types of bank charters – commercial, savings (or savings and loan), and credit union – and banks can be chartered at either the state level or federal level.
Credit unions were usually allowed to pay slightly better interest than banks, and were limited to a certain population. Those limits were often flexible – if you were related to someone who was eligible, even if by marriage, you could join – and they seem to be getting more and more flexible all the time.
The question has been answered, but I’ll chime in a bit on why a credit union works well for me.
They actually do have ATMs all over. Almost every credit union is a member of the co-op network, so a machine at any credit union works just like the machine at your particular institution. Also, (I’m not sure if this is regional or nationwide) the ATMs at 7-11 stores are no-fee for credit union members.
When I was at a big bank, I did virtually everything I needed to do with a bank online or at ATMs. I do the same with a credit union. I expect if you do stuff that requires you to go into a branch and talk to humans a lot, a big bank might gain a few points in the comparison.
To be honest, I switched because of some fees that suddenly got added to my type of account, and because the big bank had recently attempted to destroy civilization. But I’ve been happy enough with my new set up.
The NCUA (as opposed to the FDIC) insures individual accounts up to $250,000. Or at least it will until the end of this year, as part of the Economic Stabilization Act of 2008. If that doesn’t get renewed, it will likely go back to $100,000 for regular accounts and $250K for retirement accounts. Cite.
Happy Birthday, and…
Some areas, they might not be as common as others. I’m in the DC metropolitan area and credit unions are as common as banks around here. Pretty much every major Federal agency has one of their own and many of them have multiple branches. The end result is that you can hardly spit without hitting one (hell, I’m in an suburban office building, commercially owned, and there’s a branch of a very large CU on the ground floor). You can join if you’re employed by the agency, or if you report to work at the agency, or sometimes if you just do work for the agency (that was how I joined the one in my building; we happen to be on a contract for a branch of that agency, even though we don’t report to one of their locations).
The only reason we have an account at a regular bank at all is because of the safety deposit boxes; the place is near our house, and they’d charge twice the box rental if we didn’t keep an account there.
But in other parts of the country, they might not be as common, relatively speaking. If you’re used to being able to physically go to the bank, or genuinely need to go (e.g. to deposit cash) this might not work. This is less of an argument these days what with online banking, the ability to get cash at any ATM etc., but it isn’t to be entirely discounted. For what it’s worth, I haven’t set foot in our primary CU’s offices in years - and then only to pick up a cashier’s check.
There are the eligibility issues. While these have loosened up quite a bit, and you can often become eligible by joining some organization, they are still a concern. So, in some areas, you might have trouble finding any credit union where you can wangle your way in.
Anecdote: There was a new branch of a credit union opening up nearby, and they had a grand opening event in the parking lot. My husband walked by and they were giving out goodies and trying to persuade my husband to join. “I don’t work for so-and-so”, he said. “You don’t need to. Go on our website, look for the affinity groups, some of them are even free to join!”. And of course, once a member, always a member - and your family can join as well.
Their mortgage rates are typically not the best. Not awful, but you could usually do a bit better elsewhere. We actually do now have ours through our credit union, but for years before that, their rates were slightly higher, and they had origination fees. This last refi, the rates happened to be the same and we were pissed at the megabank that held our mortgage before, so…