A long time ago I had a free checking account with the regional based bank Washington Mutual. Overall, it was a great experience: Small branches throughout town, open later than most other banks, and free checking. During the financial meltdown of 2008, Washington Mutual was absorbed by Chase Manhattan. I was assured that my free checking would be grandfathered in and not to worry. I didn’t think twice about it until a few years later I was getting charged a monthly service fee to maintain my free checking. I was outraged. I was being charged to “maintain” a checking account that paid me no interest. I always assumed that most banks were offering a trade off here: “Keep a checking account with us and we’ll use that money for investments towards bank profits in trade for parking your money with us for no charge”. I decided to take my checking and saving elsewhere. I was shocked to find out that every bank in my town charged some kind of fee for personal banking. Either an outright fee or a minimum account balance. I guess the landscape had changed in the time I had been with Washington Mutual.
After checking around, I decided to investigate local credit unions. In the past they had seemed to me to be weird membershipy types of “banks” that one needed to be part of a club to join. Well, I found several in my area that were easy to join (membership requirements were occupancy of the credit union’s area of business) and years later, I still couldn’t be happier I got rid of my bank.
Should You Join A Credit Union?
Credit Unions and banks have a few major differences. Credit unions are supervised by the National Credit Union Association (NCUA) instead of the FDIC. The NCUA administers the National Credit Union Share Insurance Fund (NCUSIF). This fund is a federal government backed insurance fund that like the FDIC, insures deposits. In the case of credit unions, deposits are insured up to at least $250,000 per individual depositor. So, different government agency but your money is still safe. The major difference between banks and credit unions is that banks operate to make a profit, whereas credit unions are not-for-profit entities owned by their members. They usually have a mandate to pass profits on to the members and the communities where they live. This comes in the form of added member benefits such as low fees and low rates as well as keeping more money in the local economy through small business loans and philanthropic activity. Credit unions loans are generally lower in interest rates whether it’s a loan for an automobile, a house or a credit card. Credit unions take care of their members. There are even military credit unions for members of the armed services that provide nationwide banking and loan services.
Here’s a list of the top credit unions in the US. These are some of the largest credit unions including military credit unions and state credit unions.
I managed to join a local credit union with free checking and savings. I also got a credit card with an unbelievable 7.25% interest rate and eventually refinanced my house for a lower interest rate and got lower house and auto insurance as well. I seriously love my credit union. In this day and age, most companies make money through service fees, whether fees for account maintenance on your checking account, your mutual fund, a brokerage account, hell we even get charged monthly fees for cable boxes that customers never own. These small fees are slowly killing our finances. It’s a slow death from a thousand cuts. Joining a credit union helped me stop a few of these fees and save some money in the process. I have great atm access, a large amount of local branches, online banking and even an app for my local credit union which allows me to do wireless deposits with my phone. I’m seriously not missing out on anything a bank has to offer me.