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December 29th, 2009
11:00 AM ET

Why credit unions are better

Had it with your bank this year? Maybe it's time to make a move in 2010. In part two of our American Morning original series, "New Year Financial Resolutions," our Gerri Willis highlights some differences between banks and credit unions.

Part one: Score a better credit card

soundoff (35 Responses)
  1. pdlane

    Dan....Banks do not convert to Credit Unions because Credit Unions are not-for-profit. Also Credit Union regulations are much stricter than commercial bank regulations both the non-profit status and regulation are anathema to commercial bankers. The few Credit Unions which have converted to commercial banks were slightly shady deals where the Credit Union paid management received remuneration from the conversion. In two instances the Members took the conversions to court with the conversions being reversed leaving the then former management out in the cold.

    January 6, 2010 at 3:28 pm |
  2. Dan

    Hey Dave, if the tax exempt status is so great, then can you please tell me how many banks have converted to a credit union charter? Unfortunately, the opposite happens all too frequently (credit unions converting to banks). The fact is that credit unions do not have the same powers as banks. It is not a level playing field, so imposing taxes would only serve to destroy an institution that was born from serving the needs of people banks would not.

    January 6, 2010 at 3:06 pm |
  3. pdlane

    Reply to Dave – Grand Rapids....
    Credit Unions do not pay taxes because they have no profit to pay taxes on.... By LAW... they are not-for-profit...

    January 4, 2010 at 2:22 pm |
  4. jim vicalvi

    I've been with my credit union for a number of years and have been very happy with the service. I can check my accounts anytime using my computer and can move money from one account to the other at anytime. The only bad thing is that their credit card just raised their interest rates over 50%. It's still 10 points or more less than the big banks. I have a low limit so can live with that. In fact, I am trying to get the card paid off.

    December 31, 2009 at 3:26 pm |
  5. Dave - Grand Rapids

    I guess nobody read my post. Credit Unions don't pay taxes, so that means that you and I have to pay the taxes that credit unions don't pay. Hello!! Banks pay billions and billions in taxes in this country every year. This tax exempt status needs to change, especially since today (it didn't start out this way) credit unions and banks largely compete on an even basis, to a similar customer base. Credit unions should pay taxes! Using a credit union is like shopping at Walmart – you save a little now, but sooner or later we all go broke.

    December 30, 2009 at 2:49 pm |
  6. rsimpson

    I agree about the number of branch locations, however, there are enough ATM's around to take up the slack. I've always had my savings and loans plus credit cards at credit unions, but kept the checking account at a bank as it was located a block from home. Finally had enough of being treated like the enemy and moved the account to the institution where my other accounts reside. WILL NEVER LOOK BACK unless the W.H. screws up the credit union industry too.

    December 30, 2009 at 11:53 am |
  7. lalagigi

    I love my credit union and will never go back to a traditional bank. I spent too many years being assessed fees and charges for everything the greedy SOBs could think of. My credit union doesn't charge fees and we have many branches, even in my local grocery store.

    December 30, 2009 at 11:19 am |
  8. Clint

    Small question about the reporting here...every credit union I know of only charges a ONE-TIME membership fee (not an annual fee, as stated in the video). In many (most? all?) cases, it's a minimum balance that has to be kept in savings and is not available for withdrawal (unless you close the account altogether).

    Yes, I work for a credit union. Yes, that means I have a vested interest in making sure people don't think we're all going to charge them $25 per year. At ours it's just five bones that you have to leave in your savings.

    December 30, 2009 at 11:07 am |
  9. Courtney

    I'm with you seiscat. I am looking into a credit union and I definitely know finding a branch will be hard. Of course they want you to use your debit/credit card more so they can make money off the fees they charge merchants.

    Despite possibly being charged $10 every time I lose my debit card with a credit union, I'm willing to leave Bank of America which has given me countless new debit cards and has never charged me outrageous fees. Their customer service has been great but I don't appreciate them taking taxpayer money to fund their greed.

    December 30, 2009 at 10:53 am |
  10. Roger Gay

    I have used credit unions for over 30 years. My spouse and I have used banks many times, but 4 years ago we dropped Wells Fargo due to poor service and high costs. We now only use credit unions for all our business, checks, savings, credit cards etc. I do not see a reason at this point to ever go back to a bank for any financial support. Most credit unions are member run and they actually listen to their members. Banks on the other hand are pure profit oriented and to heck with the customer.

    December 30, 2009 at 10:30 am |
  11. Dave - Grand Rapids

    I'm in general agreement that credit unions probably offer better service and possibly better pricing than most banks. However, and this is a big however, lets remember that banks across this country pay billions and billions in taxes into our government coffers annually. Credit unions don't pay a dime. Banks consider this 'non-profit' status to be bogus and of course this gives credit unions an advantage – so they better have better pricing! So, if you don't want to pay higher taxes personally, you may want to reconsider supporting credit unions. If banks 'lose' to credit unions and in the end cannot compete, we'll all lose billions in tax revenues that you and I will have to make up. There's no free lunch here, folks.

    December 30, 2009 at 10:08 am |
  12. Dora

    A lot of credit unions don't offer online banking.

    December 30, 2009 at 9:41 am |
  13. Es

    You can use any credit union. They are all interconnected after banks tried to get rid of them. Very few aren't and that's only because some small credit unions didn't upgrade their security. But most you can walk into any credit union branch and access it (i.e. if you bank with A credit union you can go to B credit union and access A even if you don't have an acct with B).

    December 30, 2009 at 9:39 am |
  14. s'sdad

    I've found that Credit Unions are not exclusive at all anymore with most just being based on what zip code or county you live in. The problem with this is that many credit unions engage in very risky lending. In the past, they could get away with it because Joe customer worked on the plant floor and you could drop by to find out why he hadn't made his car payment. Now, the risky lending, on auto loans especially, makes them a risk to consumers who bank at them. In reality, it's your money they are lending out for Joe to buy a car, albeit FDIC insured. It's hard to argue with the favorable rates and typically better customer service than any standard bank.

    December 30, 2009 at 8:28 am |
  15. Robert

    Not all credit unions are created equal. For the most part, they are better than any bank, which is why I use them form my primary banking. From lower interest rates, to lower fees, or no fees in comparison to banks. But, as I have learned, some credit unions have lost their way, and have lost their focus on what their purpose is, and thus are not cheaper to bank with, so consumers should compare. Also, there is a move by some credit unions to convert to banks, which ends up lining the pockets of the executives, and fails to serve the members. But don't let that deter you, I would go to a credit union before I go try a bank!

    December 30, 2009 at 7:28 am |
  16. tangigrl

    I have been promoting Credit Unions for some time now. Years ago there was a time when the benefits of being a Credit Union member surpassed all other financial institutions. Intrest rates for savings accounts were at 5% and IRA's were earning a whopping 9%. For those who remember these rates you realize I have just aged myself to all. Still currently while these particular benefits no longer exist there are still great advantages like automatic overdraft coverage from savings to checking, lower overdraft fees and of course a more personalized experience from bank staff.

    December 30, 2009 at 6:43 am |
  17. Malcolm E Reding

    The biggest problem is that unless the credit unions have relationships with the ATM network, you will pay fees to use them. Here in Florida for instance, Publix Supermarket ATMs have no fees. Since I began using ATMs and online banking, I cannot remember the last time I was in a bank branch.

    December 30, 2009 at 6:14 am |
  18. pdlane

    seiscat..... You do not seem to be aware of the credit union co-op network.. most credit unions belong to the co-op where they have no charge ATMs with many being able to act as a branch of your credit union...If you are a member of a credit union that is not a co-op member... then change to a different credit union.

    December 30, 2009 at 4:37 am |
  19. Mariza

    There may be honest banks out there, but my personal experience with them has consistently been one where they're "trying to get me" with misleading advertising, and particularly, with unfair credit card practices. Since I moved to a credit union 5 years ago, I feel they're on my side. Information is transparent. I don't feel exploited or cheated, and I've come to really trust them.

    December 29, 2009 at 8:51 pm |
  20. Daniel

    I also use credit unions, and the video did not cover all the advantages and disadvantages of credit unions. I would like to see how many credit unions refund fees or penalties versus banks, because my experience shows that credit unions are more likely to forgive fees and penalties than banks will.

    As the video showed, credit union advantages include better rates. They also include lower fees, or no fees entirely (again, from my own experience, many fees are forgiven entirely if you ask them). I have opened with $50 credit union accounts and left them inactive for years without incurring a single inactivity fee. Credit union rates vary, so research as many as possible for which you are eligible to join.

    In comparison, within 3 months of opening a popular name-brand BANK account, I had to CHASE down over $14 in fees and attempt to get them back. $14 in fees charged to my two accounts in less than 90 days after opening the account. I phoned the popular bank, and was able to Chase down a bank officer, who promised a refund, but never acted on it. Instead, I was charged another $4 administrative fee.

    Credit unions have many advantages, but they also have disadvantages. I'm not sure about credit union regulations nowadays, but in the past credit unions had several rules. For one, you needed to be a direct member/employee of the credit union's parent company (or you could be a direct family member of the member/employee). Credit unions were also banned from advertising (not sure if this rule has been lifted), and they were also limited in the number of branches they could offer, if any. If you don't mind a few slight inconveniences, then credit unions are a better "socialized" alternative to the corporate bank.

    December 29, 2009 at 8:27 pm |
  21. RICHARD D. DUFFY

    Credit Unions are definately the way to go. You are a member and can attend annual meetings. Borrowing seems to be easier and quicker for qualified borrowers. They also do mortgages but not VA mortgages to my knowledge. There are far less charges and fees to customers. I have been a member for about 40 years.

    December 29, 2009 at 7:13 pm |
  22. Bryan

    Credit Unions than banks because they are owned by the members. I know the profits they generate go back to the members to help offer better divided and loan rates and offset the cost of implementing new products and services. Banks raise fees on NSF type products to help offset the cost of the same products.

    December 29, 2009 at 5:50 pm |
  23. Sandra

    Gerri stated that there is a fee of $5 to $25 per year for a credit union. It's actually a one-time "membership fee" that is returned if you ever decide to close your account. The reason for the membership fee is because the members actually "own" the credit union; shareholders don't exist. The "not for profit" philosophy allows for higher savings rates and lower loan rates. Rates on savings appear to be a nominal difference now because everyone's rates are so small, but under normal interest rate situations, the rate is quite noticible.

    December 29, 2009 at 5:16 pm |
  24. andy

    Credit unions don't deserve the amount of praise they get from your average financial reporter. Sure, sometimes their rates are a little better, but most of the time they still nickle and dime you to death with fees just as much and sometimes more than banks. Better to shop around than to assume a credit union will give you the best deal. In fact, I recently left my credit union to go to a fee free bank, and estimate that will save me about $100/year.

    December 29, 2009 at 4:38 pm |
  25. James Duffy

    Dear guys and gals of the American Morning crew. For this last 3 or 4 years now I have thoroughly enjoyed your commentary and reporting on the latest breaking news stories. In these last couple of months I've found myself homeless on the streets of San Rafael California where I live. But occacionally I'm able to get to a computer at the library and get my e-mail. I'm a thirty-two year old musician who's got blues like none other these days. I vie my time between going to the local soup kitchen and playing my harp on the street. So if any of you guys care to drop me a line some time I would greatly appreiciate it. I think you guys are fantastic and I really miss watching you in the early morning. So I'll see you soon and as always have a great American Morning. Thanks...Jamie.

    December 29, 2009 at 4:30 pm |
  26. credituniondiva

    Most credit unions belong to shared branch locations that allow you to do business at a credit unions that you dont belong to.

    December 29, 2009 at 4:15 pm |
  27. Ozilot

    I joined my first credit union when I was 19 years old serving in the Navy...the Navy Federal Credit Union – as it was on the only place that would provide me credit for furniture, cars, etc...

    Since then except for a period of 2-3 years I have pretty much banked exclusively with a credit union, their service is more client/member oriented and as a member you also have a say in some credit union matters such as electing its board of directors!

    Also given the electronic banking age local branches, or lack thereof, is not as big of an issue as it once was.

    December 29, 2009 at 4:05 pm |
  28. Shannon

    I've been a credit union member for over 22 years and it was the best move I ever made.
    There are only 3 branches of my CU, but you can get cash at any credit union branch for free, and here in Oregon, all the 7-11's offer their ATM's to credit union customers for free. Try and get that from a bank!

    December 29, 2009 at 3:21 pm |
  29. Rachelf

    But now most can be accessed at other cu branches, websites like http://www.cuservicecenter.org show which ones you can use statewide.

    December 29, 2009 at 2:38 pm |
  30. Doug Versailles Ohio

    One major reason that credit union seem to have a better deal is that they have been granted TAX FREE STATUS. That is right Credit Unions pay no income taxes. Banks pay taxes at an average rate of 36%. Give banks a tax free status and they will be able to offer better rates also.

    December 29, 2009 at 2:36 pm |
  31. jay m

    Credit Unions are better because they impose a fee for everything like banks, and they don't pay exces tens of millions in bonuses.

    December 29, 2009 at 2:34 pm |
  32. Mike

    I have found that Credit Unions provide better service and rates than banks. They are in business to benefit the members and not the shareholders, which is one of the primary reasons investors are better served with Credit Unions.

    Do you want the profits returned back to you as a member, or to go to a shareholder that doesnt even bank there?

    December 29, 2009 at 2:11 pm |
  33. SR

    I've worked at both. Credit Unions have the best interest of the people they serve in mind. That happens when you're not for profit! CUs are, hands down, better.

    December 29, 2009 at 1:48 pm |
  34. Amy

    Whoops – credit unions don't charge annual fees – the "fee" Gerri was referring to is that member's share of the credit union. Members are owners and that $5-$25 is that member's share of the credit union – it's still the member's money, not a fee. When the member leaves, they take that money with them.
    Also that website to find a credit union was incorrect. Go to http://www.creditunion.coop/cu_locator/quickfind.php to find a credit union near you!
    Great story, thank you for recognizing what we've known all along – credit unions are built on the philosophy of "People Helping People"
    Blessings for a Happy and Prosperous New Year!!
    -Amy
    Public Service Credit Union
    Romulus, Michigan

    December 29, 2009 at 12:11 pm |
  35. seiscat

    I've had good luck with credit unions – the main problem has been convenience of branchs.

    December 29, 2009 at 11:08 am |