Credit unions are definitely something to be thankful for. Most of you are probably sick and tired of dealing with your retail bank right now. Their fees & charges, inflexible rules, horrible interest rates, and big corporate structure are enough to drive most people crazy. And the problem is you’re not so sure that the next bank down the road is any better.
Recent financial reform has forced them to charge a little less on some fees, but it seems that they’ve already found other ways to offset that in areas that the reform didn’t address.
The answer may be as simple as joining a credit union. Credit unions do offer some distinct advantages over banks that most credit union members love. Here’s what’s different about them:
Credit unions have a non-profit status since President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934. The purpose of them was to “promote thrift and thwart usury.” Because of this, credit unions are exempt from most state and Federal taxes. This tax-exempt status allows them to pay a little more interest on your savings accounts, checking accounts & CD’s. It also gives them room to offer lower interest rates on money they loan to you. Banks are not very fond of this tax advantage that credit unions have (understandable so), and have been lobbying hard to get this changed. Now keep in mind that not-for-profit doesn’t mean that they don’t try and make a profit. It just means that they need to pay out all their profits each year to either employees or members. This leads to the next advantage of credit unions.
Credit unions are owned by it’s members. If you belong to a credit union, you actually own a small piece of the operation. This doesn’t mean that you get a private parking space (credit unions probably don’t have those). But it does mean that they are more likely to treat you like a real person, not just a number. It also means that they will often distribute some of their profits each year in the form of dividends to all their members. When is the last time your bank did that?
One thing that most credit unions do for their members is charge lower fees or no fees for various services. For example, most offer free checking accounts, and the fee for overdrafting them is usually $20 – $25 vs. most banks charging around $35 a pop. The nation’s credit unions have over 90 million members now, and their trade association (Credit Union National Association) estimates that members save over $8 billion a year thanks to better interest rates and lower fees. That’s pretty significant!
So if you’re tired of being ‘fee-d’ to death, and treated poorly by your bank, check out your local credit union and see if you can join. Not all credit unions will let anyone join (you might have to work for a certain employer or belong to a certain association). But chances are you can find one close by that you can join. Then you’ll have one more thing to be thankful for next year.
If you have a favorite credit union, or you’ve had a good experience with one, please share it with us using the form below.