As the Occupy Wall Street movement demonstrated this past fall, many Americans are fed up with the banking system. When Bank of America announced that it would begin charging a five dollar per month fee for using its debit card, those who banked with that institution were outraged. And while other banks have since followed suit, credit unions around the country are observing a dramatic increase in membership. If you are considering jumping ship and signing on to a local credit union, here are a few facts you should consider before you make your final decision.
Free Checking. You will be hard pressed to find a bank that offers you a free checking account anymore. Most credit unions, on the other hand, will happily allow you to open a free account. And even those their use is dwindling these days, you will probably even be able to afford the inexpensive checks they offer.
Difficulty switching? One of the myths that plague people considering a switch from their old bank to credit union discourages them from doing so because they are convinced that it’s just too difficult a process. Not true, according to the National Association of Federal Credit Unions. Karen Tyson, its senior vice president for marketing and communications, reports that all you have to do is investigate the credit union you’re considering, then ask them for a switch kit. This kit provides you with all the help you’ll need, including forms and suggestions, to make your transfer as smooth as possible. According to Tyson, the process is quick and easy and can also be done online.
Too many fees. It’s true that banks have to make money too, but credit unions don’t make it off you like the banks do. While a bank will charge you to use their ATMs or cost you in expensive overdraft fees, a credit union will usually reimburse you. In fact, most credit unions don’t charge you at all to use their ATMs. At the very least they tend to notify you quickly if you have an overdraft so you can fix the problem.
Interest rates. If you are thinking about getting a loan, you’ll be better off at a credit union. Because they are non-profit organizations, you still have to pay in – usually a five dollar fee – but that five dollars makes you a shareholder entitled to certain benefits. You are usually eligible for better loan rates and interest rates on deposit accounts.
Possible drawbacks. If you know that you won’t be staying long in the area where you are banking, switching to a credit union probably isn’t for you. Once you’ve left town, you’ll have to start all over with a new credit union, which can be a headache. As a national bank customer, you probably won’t have to worry about your finances when you move. Also, you may find the internet banking at a credit union more difficult, or that it is not quite as tech savvy as your bank’s platform tends to be. If you’re accustomed to easily transferring money from account to account online, you might discover that this isn’t an option at some credit unions.
Do your homework: research any credit unions you’re considering before you make the switch.