Are you tired of your big bank charging high fees, paying little on deposits, and providing poor customer service? If so, you may want to consider credit unions.
A credit union is like a bank, but it is owned by its members. For this reason, it is considered a non-profit organization. This gives credit unions two advantages over banks: they don’t have to pay income taxes, and they don’t have to pay dividends to shareholders. This allows credit unions to pay higher interest rates than banks and charge less for loans.
I know many bank agents who think the tax-exempt status of credit unions is unfair, and they are right. Yet I belong to several credit unions because I get better rates on my money. . Here are some things to consider when determining if a credit union is right for you.
You can join a credit union.
According to the Credit Union National Association (CUNA), there were 5,174 credit unions in the United States in March 2021. These credit unions had a total of 20,916 branches.
Many people assume that all credit unions are closed organizations, open only to a select group, such as company employees. But many of these credit unions make it easy for anyone to join. For example, one of the credit unions I belong to is the Pentagon Federal Credit Union, although I have never served in the military or worked for the federal government. I was able to become a PenFed member after paying a one-time fee of $ 20 to join a charity – but they don’t need it anymore.
Here is a partial list of credit unions that anyone can join. With other credit unions, you may need to live in a specific geographic area or work for a specific business.
Your money is insured, just like money in a bank.
Similar to the Federal Deposit Insurance Corporation (FDIC) bank, the National Credit Union Administration (NCUA) insures your money in a credit union Accounts are insured at $ 250,000 per depositor or $ 500,000 for a joint account. Your money is as safe in a credit union as it is in a large bank.
Credit unions can offer great rates for your deposits and loans.
I have found that many credit unions pay higher rates for deposits and charge a little less for loans. CUNA data confirms this: They estimate that members of credit unions pay 0.70% lower rate on new car loans and 1.4% lower on used car loans than credit unions. customers of for-profit banks.
To find the highest savings rates, I go to depositaccounts.com, a site that tracks savings accounts and certificates of deposit from banks and credit unions. You can also find the rates of credit unions in the list of the most profitable savings rates on Bankrate.com. Since credit unions are generally much smaller than banks, they can also be more flexible in negotiating rates. I hiked the prices of CDs at a few credit unions. If you don’t ask, you don’t get.