Credit Union Benefits
www.cambridge-credit.org -- Transcription: In our last episode we discussed the overall benefits of using a credit union versus a bank. If you recall, credit unions are founded on the Seven Cooperative Principles philosophy. These principles, which include open membership, democratic control, member economic participation, autonomy, education, cooperation, and concern for the community, predicate their actions. A credit union's not-for-profit status, and membership driven philosophy, are reasons enough to consider making a switch. However, you might be surprised at some of the little things that really make a credit union membership worthwhile.
I recently spoke with Morriss Partee, founder of the Everything CU website for credit union professionals, and we discussed some fantastic credit union benefits -- some of which I was not even aware. For instance, many credit unions are part of a large network, called Shared Branching. If your credit union is a member of a Shared Branching system, you can use any other credit union in that network as you would your own. You can go in and ask account questions, cash a check, or just about any other transaction you would at your own branch. If you're concerned about ATM access, you needn't be. Believe it or not, some credit union ATM networks are larger than that of America's biggest bank. Your credit union may even rebate any ATM fees you are charged.
Another difference you’ll find at a credit union is their willingness to help. Remember, you are a member, not a client. Mr. Partee informed me that many credit unions offer financial literacy education and personalized budgeting advice. You can work one-on-one with a professional if you’re looking to solve your family’s budget problems. You may also be able receive credit guidance if you're turned down for a loan. A representative, from a participating credit union, can review the reasons your loan application was declined and help you strategize ways to improve your credit.
Some of you are probably wondering, “Do credit unions offer credit cards?” Credit unions are full service institutions, and many offer credit cards. You should always take caution when applying for additional lines of credit, especially if you're having a difficult time making your bill payments. However, if you're in the market for a credit card, you would be missing out if you did not shop at a credit union. Granted, you must be a member of a credit union in order to apply for their credit card products; however, as a popular slogan notes, membership has its privileges. On average, credit union cards carry a 12% interest rate. What's fascinating is that the average penalty rate is just shy of 18%, compared with the penalty interest rate of 29.99% that has become common in the for-profit banking industry.
There are plenty of reasons to consider using a credit union. Typically, you receive higher interest rates on savings accounts and certificates of deposit. You'll usually receive more favorable terms on home and auto loans and credit cards, and you're very likely to save money on checking account fees. There are also many advantages to using your current bank, or even switching to a local bank. Every financial decision you make needs to be weighed against the value you receive in return. You may like the security or convenience of a larger banking institution and find their fees reasonable. However, many of us are struggling through this difficult economy, and we should always be on the lookout for money-saving alternatives such as credit unions and local banks. As a customer, you have choices. It's important to examine these choices when the terms of the services you've been provided are altered. This is true of any financial product, be it a credit card, or a checking account. If the new terms are not to your liking or don't fit comfortably within your budget, shop around.
To find a credit union near you, visit the Credit Union National Association's website at www.creditunion.coop and select Locate a Credit Union, which is located on the left-hand-side of the screen. A quick find function will return results based on your selections, and provide detailed information about the various credit unions in your community, including membership requirements.
Well, that’s it for this edition. As always, we welcome your feedback and ask for your thoughts and suggestions by e-mailing us at [email protected]. Thank you for watching. Until next time, I’m Thomas Fox for Cambridge Credit Counseling.