How a Credit Union Membership Could Save You More Money

When most people think of depositing money at a financial institution, banks usually come to mind far more often than credit unions. This is mainly because many people consider credit unions to be exclusive clubs that only a select few can join.

However, times have changed and now just about anyone can join a credit union in their city. Plus, the really good news is that joining one often offers perks that banks just can’t compete with–so much so that they help you save more than what is already in your account.

Why Are Credit Unions Different?

There is one major reason that obtaining a credit union membership is different than simply belonging to a bank. Credit unions are not-for-profit entities owned by their members, unlike banks that are owned by shareholders. This means the people who run the credit unions have a vested interest in what is offered to members.

As a result, the Board of Directors makes sure that there are a wide number of services available that can compete with bank services, including free ATM use, electronic banking, high interest savings accounts and rewards checking accounts. In addition, they offer member-only extras that could ultimately save customers more money than if their assets were stored in a bank.

How You Could Save by Joining a Credit Union

Credit unions have a good reputation for saving members money. Here are just a few ways that they are known for getting this done:

Lower loan rates: Typically, you can expect lower interest rates on credit union loans than bank loans. The National Association of Federal Credit Unions chart shows the national averages for various loans and other accounts. As you can see, mortgage, HELOC and auto loan rates are generally lower for credit unions.

Higher savings rates: On the same chart, you can see that average rates for CDs, regular savings accounts and money market accounts are higher than banks. This is because credit unions don’t benefit as much from lowering savings rates or increasing loan rates as a not-for-profit.

Network of credit union ATMs: Unlike banks that often charge fees for withdrawals from foreign ATMs, credit unions usually don’t charge as long as you use an ATM within the credit union network. This allows customers the freedom to withdraw from more places and spares incurring those $2-$4 fees each transaction.

Fewer fees: Typically, credit unions charge fewer fees on accounts and loans, as well, saving members tons of money in the long run.

Dividends paid: At a credit union, if excess funds are available, the institution will generally return the money to its members in the form of dividends, adding the money directly into member savings accounts.

Tons of extras: Thanks to credit union ties to the local community, you could take advantage of free or low-cost life and auto insurance, identity theft insurance, grocery coupons, sports and amusement park tickets and more that could save you money in ways other than deposit and loan products.

In addition to saving you money, it’s good to know that credit unions are federally insured for up to $250,000, just like banks, through the National Credit Union Administration (NCUA).

Are All Credit Unions Local?

While many credit unions are founded locally through organizations or businesses, you may be able to join a federal credit union, too. For instance, the Pentagon Credit Union is a federal credit union that serves nearly 1 million members of the Air Force, Army, Coast Guard, Department of Homeland Security and more.

There are other federal credit unions available that accept members based on a number of criteria. In order to decide between local and federal credit unions–or even credit unions vs. banks–it’s up to you to explore your personal preferences then look at bank and credit union ratings to determine which have the best reputations.

Once you’ve explored both banks and credit unions–and the services they offer–you could make a more informed decision. Keep in mind that since credit unions are in the business of serving the people, the odds are good that you could have a favorable experience if you choose to take this route.