Credit unions charge substantially lower and many fewer fees than banks - that is fact proven in survey after survey. Which raises the question: Why don’t you belong?
There are two reasons, said Greg McBride, chief financial analyst at Bankrate.com. The first: “Many people mistakenly believe they are not eligible for membership. Often they are.”
Reason two, said McBride, is that many of us have fled to what we perceive to be the most financially secure and safe options - that’s big banks, in most minds, said McBride. And yet federal credit union deposits are insured by the U.S. government through an agency called the National Credit Union Administration.
Which means the big reason we don’t join is that we - mistakenly - think we can’t. Don’t you have to work at a particular company or belong to a particular labor union to join a credit union? Used to be so. No more.
Fact: there are many hundreds of credit unions with wide open membership and included are some of the nation’s biggest, with a range of services that rivals big banks.
Is it worth switching to a credit union? “It’s important for the consumer to shop around and get the best deal," McBride said. "That includes checking accounts.” When Bankrate looked at fees and credit unions, not only did it find that most offer free checking with no minimum balance - 72% of credit unions in a recent Bankrate survey - it also found that they generally charge lower fees for the same services than do banks. For instance, the average credit union overdraft fee is $26.78. The average bank overdraft fee, per Bankrate, is $32.74.
“Credit unions are not for profit cooperatives that are owned by their members,” said McBride. Rather than passing profits to shareholders - the norm at banks - credit unions pass the savings to members-owners.