Tue 9 Feb 2010
What you gain from switching to a credit union
Posted by lizweston under Banking, Q&A with Liz
[3] Comments
Dear Liz: I want to stop supporting the greedy banking industry by changing my checking account from a big bank to my local credit union. But I’m worried I will have to give up services I like, such as online banking and free bill payment. What will I give up if I use a credit union?
Answer: You may not have to give up anything, and you may gain a few things, depending on how you bank.
Credit unions are member-owned, which means they don’t have to worry about making profits for shareholders. That translates into better interest rates and lower fees than banks. Many people discover credit unions when they’re looking for auto financing or personal loans, drawn by credit unions’ typically lower rates compared with those charged by banks.
You may find banking with credit unions cheaper in other ways. Most have very low minimum balance requirements for free checking and savings accounts. Many credit unions are also members of the Co-Op Network, which offers fee-free access to more than 28,000 ATMs nationwide, far more than any bank.
That doesn’t mean they’re right for everyone. While most credit unions offer online banking and free bill payment services, for example, their other services may vary. Some offer real estate loans, for example, while others don’t.
Before you switch, you’d be smart to review your transactions over the past few months and think about what loans or services you’re likely to need in the future. Make a list and ask your credit union what it provides and what fees it charges.
If you decide to move, open your new accounts first and set up online access so you can monitor your transactions. Then move any direct deposits you have, such as your paychecks. Change any automatic debits and recurring payments so they come out of your new account. Keep open your old accounts until all payments have cleared, then shut those down.
To find a credit union you can join, visit www.creditunionfinder.com
This is such a great resource that you are providing and you give it away for free. I love seeing websites that understand the value of providing a quality resource for free. It’s the old what goes around comes around routine.
I used a credit union for years and the one thing they were slow about was clearing incoming checks. If you have payroll direct deposit it’s fine. In my case, my business checking was at another bank. I would deposit say a large expense check, see the money withdrawn from my business banking the next day and yet it would be on “hold” for 10 business days before the CU released it. When I complained they said that I could call and ask them to release it sooner EACH TIME I make a deposit. No thanks!!
I remember running into a similar problem when I deposited the check from selling my first home. But that was a HUGE check and well out of my normal depositing pattern. It would be annoying to run into the hold issue continually. Like banks, CUs differ on their hold policies, so that’s another question to ask before you switch.