Has your bank started charging you a monthly fee? This has become more common this year especially at the large banks. If you're hit by fees, you should consider moving your money. When you go looking for a new bank, don't forget credit unions. Not only is free checking more common, you will often find the best savings account rates and loan rates at credit unions. Even though you may be familiar with credit unions, there are some important facts that are not well known.
1. NCUA versus FDIC: The vast majority of credit unions are federally insured by the National Credit Union Administration (NCUA), which provides essentially the same insurance coverage on deposits as the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits.
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2. Deposit Insurance: Not all credit unions are federally insured by the NCUA. A few states allow credit unions to only have private insurance. All federal credit unions (those with federal in the name) are federally insured by the NCUA. There are a few state-chartered credit unions in certain states that are covered by only private deposit insurance.
3. Eligibility: Membership is limited, but joining a credit union is probably easier than you think. All credit unions have a field of membership (FOM) in their charters that defines who is eligible to join. This can be based on the community where you live, where you work or what associations you belong to. FOMs have expanded in recent years making it easy to join many credit unions based on where you live or the associations you belong to.
4. Member for Life: Once you are a member of a credit union, you can remain a member regardless of what happens to your original qualifications. If you move to a new city or if you change employers, you can remain a member of that same credit union.
5. Terminology: The deposit account terminology at a credit union is a little different than at a bank. Savings accounts are typically called share accounts since they represent an ownership in the credit union. Likewise, a certificate of deposit is often called a share certificate. Instead of earning interest, you earn dividends.
6. Share Account: All credit unions require you to maintain a share account with a minimum balance even if you just want a loan. This is typically a savings account, and the minimums range from $1 to $50.
7. ATM Access: Free ATM access can be as widespread as a big bank. Many credit unions belong to nationwide ATM networks. This gives you surcharge-free access to thousands of ATMs around the country.
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8. Branches: Branch access can be as widespread as a big bank. Many credit unions belong to a shared branch network. This allows you to perform many banking transactions at an office of another credit union which is also part of this network. This gives you access to thousands of branches around the nation.
A credit union may not always be a better choice than a bank. Fees may not always be less, and a credit union may not always have the banking product that you're looking for. Nevertheless, credit unions give consumers more choices, and many times you will find better rates and fewer fees at credit unions. In addition, you might be surprised by the accessibility and convenience of the credit unions.
Ken Tumin is the primary blogger for DepositAccounts.com, a site that provides comprehensive listings of rates of all types of deposit products from banks and credit unions. In addition to rate comparisons, DepositAccounts.com provides several services to help readers in their banking decisions such as listings of bank health ratings, a blog and a discussion forum.