Now that the federal government has targeted banks for increased taxation and regulation designed to reduce bank profits, it makes more sense than ever for savers to consider the advantages of credit unions.
Credit unions are member owned, non-profit and tax exempt. Consequently, they can offer lower fees for services and higher interest rates on savings, including certificates of deposit and money market accounts, than banks can offer (bank vs credit union rates).
In order to protect their profits, banks will likely pass on to their customers, through higher fees on services and lower interest rates on savings, the additional costs that the government is imposing on the banks, increasing the cost disparity between banks and credit unions.
You are more than a customer at a credit union: you are a member. The credit union is there to serve you. Membership gives you a voice in the form of a vote in the election of the board of directors that manages the credit union. Banks are in business to make a profit for stockholders. Customers are merely a means to that profit and have no say in the management of a bank.
Your voice is important in the present volatile financial environment. Mismanagement has caused many banks to fail. In fact, 140 banks failed in 2009 compared to only 31credit union failures(failed banks and credit unions 2009). Just as bank deposits are backed by the government through the FDIC, credit union deposits are backed by the NCUSIF with the same limits on coverage as the FDIC, currently at $ 250,000.
Thanks to relaxed membership requirements, credit unions are more accessible than ever before. Credit union membership was originally restricted to those who had an affiliation with a particular business, trade, business group, religious group or fraternal organization. Now membership eligibility in many credit unions is based solely on geographic location rather than occupation or affiliation. To find a credit union in your area go to this link: locate a credit union or call 1-800-358-5710.
Credit unions offer most of the services, products and convenience of a bank: Free checking accounts, savings accounts, money market accounts, certificates of deposit, IRA accounts, direct deposit, ATM cards, debit cards, bill payment services and access to your accounts by phone or internet. Some also offer safe deposit boxes, financial services, credit cards and free term life insurance (check with your credit union for coverage eligibility and details). View your credit union’s web site for a list of products and services or call your customer service representative. Larger credit unions have branch offices scattered about their service area for additional convenience.
Becoming a member of a credit union is as simple as opening and maintaining a savings account. Usually a minimum deposit of $15.00 to $ 25.00 is all that is required. You can then take advantage of the other products and services that the credit union offers and start saving money on fees and earning a higher return on your savings.
Copyright 2010 K.C. Knouse
K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages