Many people across the nation has soured on the large banking institutions, feeling like the banks have been taking advantage of them to line the pockets of the bank’s executives and shareholders. As a result, some of these individuals are starting to view credit unions as the better option for storing their money. But are credit unions truly a better choice than the large banks for storing your money?
Many people have moved their money from their accounts at large banking institutions to smaller credit unions in their area to escape the numerous fees and fee increases the large banks have been charging their customers. Reports that Bank of America and other large banking institutions were planning to charge their customers for accessing their money using the debit cards linked to their accounts created an uproar and a planned day of protest where thousands of the bank’s customers moved their accounts to other banks.
People that researched moving their accounts to a credit union found that the credit unions are offering incentives for opening bank accounts and using debit cards connected to the accounts, including cash back rewards or rewards points for usage. Some credit unions are also offering cash incentives of between $100 and $150 for opening new personal accounts and perks to lure in more business banking customers.
Credit unions offer many of the same services that the large banks do and often charge less in fees for those services. Credit unions also typically offer higher interest rates for your savings accounts and lower interest rates for any loans you take out. For example the national average interest rate for a 5-year CD at the largest banking institutions was 1.78% in June of 2011, the most recent data available from the National Credit Union Administration. The corresponding rate for 5-year CDs at credit unions averaged 2.09%.
There are some restrictions on who can join a particular credit union and the rules will vary between credit unions. For some credit unions, all members have to work for a certain government department, company, or school. Other credit unions require that their members live in a certain geographical area or belong to a particular group. Be sure to ask about the qualifications needed to join the credit union in your area, because they may serve a broader customer base and you may be able to qualify to join.
There are some things that you must keep in mind when considering whether to join a credit union. Most credit unions do not have a lot of ATM available but many are part of a network of ATMs that will let the customers of the credit unions take out money surcharge-free. Credit unions are not covered under FDIC coverage, but federal credit unions are protected against institutional failure by the National Credit Union Share Insurance Fund, which insures accounts up to $250,000. The benefits of using a credit union can outweigh the hassle of moving your bank account, but be sure to shop around for the best place before deciding to move your money.