Credit unions offer an attractive alternative to the average national bank, especially since many are paying higher interest rates on savings and charging lower interest rates on loans.
At a time every week seems to bring more news about banks being shuttered and taken over by the Federal Deposit Insurance Corporation, savers may want to look elsewhere for a place to park their cash. Credit unions may offer an attractive alternative, especially since many credit unions are paying higher interest rates on savings and charging lower interest rates on loans. Credit union accounts are also insured by the National Credit Union Association, which, like the FDIC, is backed by the US government.
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Credit unions may be able to offer better terms than for-profit banks because they are owned by their members. There are no shareholders who need to be paid dividends, which translates into lower costs and less pressure to perform for profit. Credit unions also tend to have a minimal number of brick-and-mortar branches and fewer ATMs, which can also lower overhead costs.
On the other hand, credit unions may also have lower costs because they don’t offer many of the services that customers of for-profit banks enjoy. Fewer branches and ATMs may mean less convenience and possibly more frequent ATM fees. And because there are fewer of them, finding a credit union isn’t nearly as easy as finding a for-profit bank. To find out whether there are any in your area, go to the Credit Union National Association’s Web page.
Also, membership in many credit unions may be limited to certain groups, such as company employees, union members, or residents of individual towns or neighborhoods.