While commercial banks still control the majority of financial assets in the U.S., over the past decade, there has been a huge migration of people switching to credit unions. For many people, choosing a credit union over a traditional, commercial bank (i.e., Bank of America, Wells Fargo, Chase, etc.) is often a fiscally-wise decision as credit unions tend to have lower fees, charge lower credit card and loan interest rates, and offer better savings rates. If you, like me, are always trying to find more ways to save and earn, consider the following benefits before opening just any bank account.

Note: Keep in mind that the following list of ways a credit union can save you money contains generalizations. Be sure to check with an account representative about specific credit union benefits.

1. Free checking accounts

According to Bankrate’s 2014 Credit Union Checking Survey, 72% of the nation’s 50 largest credit unions offer members a free checking account. A free checking account means that the credit union doesn’t charge a monthly service fee or point-of-sale transaction fees, regardless of how much money is in the checking account balance. On the other hand, the survey found that the number of banks offering free checking accounts fell from 76% in 2009 to just 38% in 2013. For example, let’s say that you had a Bank of America MyAccess Checking Account, one of the most popular checking accounts in America. With this account, if you do not have at least one qualifying direct deposit of $250 or more each month or do not maintain an average daily balance of $1,500, then you have to pay a $12 monthly maintenance fee, which adds up to $144 a year and $720 in five years. Think of all the shoes you could buy with that money!

2. Special discounts for members

Many credit unions offers special discounts for their members. These discounts vary by credit union and are subject to change and availability. Here are some examples:

  • At the ABCO Federal Credit Union in Rancocas, NJ, members receive: 5% off Enterprise Car rentals, $15 off FTD Flowers, and 10% off Sprint wireless phone plans.
  • At the Navy Federal Credit Union, some of the member discounts include: 20% off Hertz car rentals, 12 months of free McAfee anti-virus protection, and an online member mall where members can earn rewards by shopping at over 800 top online stores.

3. Higher interest rates

The results of an April 2014 GOBankingRates survey showed that the average April 2014 credit union interest rates for checking accounts, savings accounts, money market accounts and a variety of certificate of deposit terms is higher than the interest rates provided by banks. This pattern is also corroborated by data provided by the National Credit Union Administration.

4. Lower interest rates on car loans

According to September 2013 data provided to NCUA by SNL the national average interest rate for several types of car loans was lower for credit unions than banks. See chart below:

5. Better microloans for small business owners

Many small business owners who bank at traditional banks are discouraged to find out that their business is too small to qualify for a business loan from their bank. Alternatively, another problem occurs when a business owner’s business is big enough to qualify for his or her bank’s business loan, but the bank has a business loan minimum amount that exceeds the amount the owner is comfortable borrowing. In these situations, a small business owner may want to look into a credit union that offers microloans for business, a growing trend within the credit union industry. Some credit unions also offer microloans to individuals.

6. Tools to help members rebuild tarnished credit scores

Bad credit can keep you from getting a job, makes finding housing difficult, can increase your insurance rates and makes getting a car loan, credit card or mortgage difficult. Instead of offering high-fee services (i.e, predatory payday advance loans) that will just send the customers further into a debt spiral, many credit unions offer tools aimed at helping the customers  rebuild a tarnished credit score. Some of these tools include free credit counseling and financial planning courses, free online debt management courses and literature, low-cost secured loans, small credit builder loans with low interest rates, and secured credit cards with low interest rates.

 

To find a credit union near you, use the National Credit Union Administration’s (NCUA’s) Credit Union Locator Tool. To search credit unions using additional parameters, including type of membership filed, use the NCUA’s Research a Credit Union Tool.

6 Ways Using a Credit Union Can Save You Money