#968 Credit Unions

5 Dec

Want lower fees, higher interest rates on savings and lower interest rates on loans? Bank with a credit union instead of a corporate banking behemoth. Credit unions are non-profits that are owned collectively by the customers, so they are much more apt to be customer and wallet friendly. While traditionally credit unions have been for certain groups (teachers, police officers, government workers), it’s easy to join one near you. If you go through the effort to find a credit union, you should be able to join one no problem.

When I first bought a car, I was just out of college and had no credit history. The car people called me a “credit ghost” and the only loan they could get me without a co-signer was with Capital One at 12%. Ouch! The car people advised I just refinance after a couple months. Obviously they really wanted to sell me the car. In a few months, I took a look at refinancing. I wanted a lower rate immediately. Because I worked at a school, I could join a teacher’s credit union by opening a savings account with $5 that would accrue interest. Then I could apply for a loan for the car, which I got in no time at 4.25%. No other loan could I find that was that low or willing to refinance for me. I’ve been sold on credit unions from then on. Currently credit union rates for cars can be as low as 2.89% and for mortgages can be as low as 2.75%.

Basically I learned that if I’m going to buy something big like a car or house, I’ll get pre-approved at a low rate from a credit union first and then be confident when shopping around that my loan will be both approved and at a low rate.

It’s also thought that credit unions aren’t technologically savvy or you won’t be close to an ATM for cash withdrawals. All credit unions now should offer online banking. And I haven’t gone to an ATM in years. I get cash back at the grocery store on my debit card and can combine two things at once, getting groceries and cash, and I never pay ATM fees for using an out-of-network ATM. In fact with online banking, direct deposits and debit cards, there’s hardly a need to go to your bank, much less use cash. I barely use checks anymore either.

Credit unions earn high customer satisfaction rates, something I’m sure Bank of America only dreams of (actually probably not, they just don’t care). And as everyone is an owner, the customers interests are served first and foremost. Imagine that!

Credit unions offer the full suite of financial services including credit cards, holiday savings accounts, checking and savings as well as financial advice, education and counseling. They are also fully insured like banks, although possibly less likely to go under as they don’t take the same financial risks that ended up collapsing many banks a few years ago. The only reason more people don’t use them or know about them is that their marketing and advertising is limited as they don’t have the resources to spend money on glossy ads or feel-good commercials. Not only will you be saving money or earning more money on your savings by using a credit union, you’ll also be supporting a local bank and the local economy.

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