Save Money at a Credit Union
October 16, 2011, By Mark Meissner 0 comments
It seems like every other day we hear of another big bank starting to charge more fees to access your money. Bank of America recently announced a new $5 monthly fee for using your debit card. According to this Politico article, “Bank of America CEO Brian Moynihan defended his company’s new $5 monthly fee on debit cards, arguing that 'we have a right to make a profit.'” After the announcement by Bank of America, Citibank announced new fees on their checking accounts. According to that same article, “Wells Fargo, JPMorgan Chase, Sun Trust and Regions Financial have all also rolled out similar fees in select markets in recent weeks.”
The Bank of America CEO is correct—his company does have a right to make a profit. However, we have a right as consumers to choose not to help him make that profit. Instead, we can choose to keep that money for ourselves and not make him and his investors rich by banking with credit unions. The main difference between big banks such as those mentioned above and credit unions is that credit unions are owned by their customers or members, while the big banks are owned by outside investors or shareholders who are looking to make money on their investment. When the members own their bank, the bank works for them, which is the main purpose of a credit union. Moreover, credit unions are not-for-profit organizations that operate to serve their members, not maximize profit like big banks.
Here’s what you should know about credit unions: Most all credit unions are federally insured by insurance similar to FDIC, provided by the National Credit Union Administration (NCUA). If the credit union has "federal" in its name, it is required to carry NCUA insurance; some states require only private insurance, so ask to make certain. This provides you the same reassurance as FDIC that if something goes wrong with the credit union, your deposited money is safe.
To use the services of a credit union, you have to become a member. Some credit unions are restricted to only allowing new members based on where they live, while others restrict membership to certain companies where people work. Others, however, are open to anybody. Once you’re a member, you’re always a member even if you move.
You will also find that credit unions use different lingo. Instead of a 'savings accounts' it’s called a 'share account,' because you own a share of the credit union. Likewise, CDs are referred to as 'share certificates' and you earn dividends instead of interest.
Some people might argue that banks provide more convenience, but most of the larger credit unions provide ATM access, which is typically as widespread as the big banks because many credit unions belong to the same nationwide ATM networks. Credit unions do vary in the amount of ATMs accessible for free use, so check before signing up to find out which ATMs you will be able to use for free, and also find out how much they charge for you to use ATMs that are not part of their network; quite often these fees will still be less than big banks. Moreover, many credit unions belong to a shared branch network, allowing you to access various other credit unions to do your banking.
