Answering a reader’s question about whether a credit union is a good place to look for a car loan, an MSN Money article this week outlines seven reasons that credit unions are better than banks, and not just in terms of car loans.
The seven reasons MSN Money lists are:
1. Lower rates on loans
According to the National Credit Union Administration (NCUA), as of June 28 the average rate on a 36-month car loan was 2.85% at credit unions and 5.59% at banks. Banks are charging nearly twice as much for the same loan.
2. Higher rates on savings
The rate differences on savings aren't as great, the article points out, but interest rates on 10 different types of accounts, from checking to five-year certificates of deposit, are higher on average at credit unions than banks, according to the NCUA Web site.
3. Better credit card deals
According to the NCUA, the average credit card interest rate in June was 12.85% for bank-issued cards, compared with an average of 11.56% for cards issued by credit unions. In addition, credit union credit cards tend to have lower fees and fewer of them.
4. Easier to borrow
While no lending institution is going to be careless with loans, community-based credit unions tend to be easier to deal with than megabanks. Lending decisions are more likely to be made locally with more flexibility.
In addition, while few national banks would make what's called a "signature loan"—an unsecured loan guaranteed only by your signature—credit unions routinely offer this service to their members with good credit.
Credit unions have come a long way with making their online, phone, and in-person services as easy as possible. Many credit unions belong to a shared branch cooperative, the article points out, that allows members of one credit union to conduct business at any other member credit union anywhere in the country—even overseas. And when it comes to finding the nearest participating credit union? Yes, there's an app for that.
6. Lower fees
When it comes to banking fees, you'll probably find better deals at credit unions than at the giant commercial banks. Whether you're comparing fees to maintain a checking account, foreign ATM fees, or penalty fees for overdrawing your account, they'll probably be lower.
7. Human beings answer the phone
The article’s author explains that she’d never suggest that any business automatically beats another when it comes to friendly employees, however she described her experience when calling her bank's national customer service number to get a problem resolved as “not fun”.
When addressing the reader’s concern about safety, the article points out that members’ money is as safe at a credit union as it is at a bank. Credit unions offer the same deposit guarantee—up to $250,000.
The article goes on to say that in days past, it used to be a bit more difficult to find a credit union to join, but nowadays, many are community-based are require that you live, work, or go to school in the area, making the membership base very broad.
The article then points readers to www.asmarterchoice.org, www.culookup.com, and www.creditunion.coop to search credit unions.
To read the MSN Money article in its entirety, click here.