With bank fees on the rise, many are looking to take their business to smaller financial institutions. One popular option are credit unions. A credit union is a cooperative financial institution owned by its members. As a result, these smaller institutions often offer banking services at lower costs and with better rates.
In the Daily Dough, our email newsletter that goes out each week day, I asked readers to tell me about their experience with credit unions. The result was overwhelming. We got a lot of positive recommendations, which I’ll share below.
Finding a credit union is a two-step process. First, you have to find a credit union near you that you can join. Credit Unions have different membership requirements, often based on your job, military service, or membership in another organization.
Once you find options that you can join, you then need to evaluate fees, banking services, interest rates, and the like. You can’t assume that all credit unions are good deals. In fact, one reader emailed me to complain about his credit union:
Since they are small, there are only a few offices. They are not easy to travel to, I could not get there and back on my lunch hour, so I have to go on Saturday morning. Once the day ends there is no way to contact anyone at the bank. Too bad if you have a problem – you will just have to wait until the next day to resolve it. For what it is worth, my experience with our local Credit Union has been terrible. As soon as I get back home I feel I can find a bank that gives me less headaches. The negative outweighs the positive by far with this institution.
Furthermore, credit unions do charge fees. In fact, in 2010 credit unions earned $13 billion in fees, and fee income as a percentage of total revenue has doubled since 2000. Why? With lower interest rates, financial institutions are making less and less on rate spreads.
The key is to do your homework. So let’s look at a few tools that can help you do just that.
How to Find a Credit Union
There are several websites that focus exclusively on credit unions. These sites can make finding a CU much easier and faster.
FindACreditUnions.com: This site has a very easy to use search function. Simply put in your address, and it returns a list of credit unions in your area. I was surprised to see about 30 credit unions within 5 miles of my home.
The search results usually indicate membership requirements. They also provide links to a review of the credit union and a link that takes you directly to the financial institution’s website.
America’s Credit Unions: This site also has a search function, but with a twist. In addition to entering your zip code to find locations near you, you can also enter an organization your associated with. This allows you to search for credit unions based on local governments, businesses, charitable organizations, and so on. I entered our school district and found a credit union we could join based on where our kids attend school.
ASmarterChoice.org: In addition to a database of credit unions, this site also offers some great resources and news about the CU industry.
Credit Unions Online: The last resource in our list offers a directory of credit unions, as well as calculators and news about the industry.
Reader Recommended Credit Unions
In response to a newsletter last week, several readers replied to share with us their favorite credit unions:
Eastern New York Federal Credit Union (Napanoch, New York)–ENY offers an excellent rewards checking account:
- ATM fee refunds, up to $15 each month, on any ATM you use nationwide
- 2.5% APY* returns on your balances of up to $15,000
- 0.25% APY* paid on balances over $15,000
- Free checking no matter what, and a base rate of 0.10% APY* even if you don’t meet the requirements in a given month. No monthly service charges, no per-check fees ever.
Mid-Hudson Valley Federal Credit Union (Kingston, NY)–The reader who mentioned Mid-Hudson Valley expressed some concern with its fees. It does offer a free checking account, but it’s not a rewards account.
Security Service Federal Credit Union (Texas, Colorado, and Utah)–Offers free checking and a 7.9% fixed rate balance transfer for life. One thing I’ve noticed is that credit unions generally don’t have the best balance transfer offers you can find. But if you plan to take years to pay off your credit card debt, a fixed rate for life offer can be a reasonable approach.
Wright Patt Credit Union (Dayton, OH)–Wright–Patt offers what it calls “totally fair checking,” which is basically a free checking account. It also offers a credit card with rates as low as 6.25%. One thing that was a bit disappointing was a low 0.15% on savings accounts.
The best online banks offer about 1%.
First Bank of Greenwich and Greenwich Bank & Trust (Greenwich, CT)–Finally, one reader recommended these two local banks. While not credit unions, I’ve included them in the list as options to consider.
If you know of other credit unions you think should be added to the list, please leave a comment below.
Published or updated October 28, 2012.