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With large banks raising fees, many people are considering moving their money to a more local, customer-friendly credit union.
If you’re not sure what a credit union is, we explore it in exclusive interview with Mike Schenk, VP of Economics for the Credit Union National Association.
We also addressed some of the factors keeping people with their banks, in spite of rising fees. “Convenience” and “old habits” are probably first on the list, with a lack of knowledge about credit unions and what they can offer a close third. Finally, people tend to fear the unknown, especially when it involves entrusting others with large sums of their money and all their financial data.
First, understand this: Credit unions carry similar insurance and government backing as banks doCredit union members’ deposits up to $250,000 are insured by the National Credit Union Administration (NCUA) and backed by the full faith and credit of the U.S. government. This is the same as the FDIC backing bank deposits. If you don’t put much trust in the “full faith and credit of the U.S. government,” there’s always your mattress to save your money, but this article is exploring about practical solutions to your banking needs.
With that out of the way, you still may be hesitant to switch to a credit union. Here are a few things to think about and questions to answer:
1. Check your current bank statement. Did you read the fine print on your current banking statements to determine if you might be exempt from additional fees — or if there’s action you can take that would lead to waived fees? (Such as consolidating money from several accounts in different banks into just one.)
2. Did you try to negotiate waived fees with your bank?If you’re happy with your bank now and are just angry about the new fees, you should try to negotiate with the bank, especially if you’re a long time customer. The worst they could say is “no.”
3. Is now a good time to switch banking service providers? Can you safely move your money without bouncing any checks? If you are applying for a home mortgage or car loan, it’s not a good time to switch, since lenders will be looking at the length of time you’ve had your accounts. A sudden switch of banks, as well as any unusually large deposits or withdrawals, could cause raised eyebrows. (Unless, of course, you’re getting a mortgage from the credit union where you’re now depositing your money).
4. Do your research about the credit union’s ATM serivices. Does the smaller local bank offer the convenience of a nationwide ATM network and banking at locations across the country?
5. Will there be any fees in the future? Do you have any guarantees that switching to another bank won’t just lead to different fees down the line? (There’s no guarantee of this with a credit union, either, but there is a long precedent of lower fees, lower loan interest rates and higher savings interest rates.)
6. Make sure customer service is still a priority. What’s the customer service like at your current bank, compared to any local banks or credit unions where you are considering placing your money? How is it at peak times? Slow hours? Is it spotty or consistent? And how is it at various branches in your neighborhood?
Questions to Ask When You Decide to Switch to a Credit Union
If you’ve answered these questions and made the decision to begin banking with a credit union, it helps to outline your needs. If convenience is number one, you’ll want to find out how many branches your credit union of choice has in areas you commonly visit. Also, don’t judge a credit union by its name alone. Find out how many affiliate credit unions will serve you with no fees. You may find credit unions all over the country that provide services with no fees — likewise with ATM machines.
Here are some other considerations:
- Do you want online banking capabilities?
- What services are you most interested in: checking, savings, credit cards, loans?
- What fees are associated with credit union accounts, as well as credit cards?
- What interest rates do they offer for savings, checking, credit cards, loans?
- What benefits, rewards and perks are available with the debit and credit cards?
Because credit unions also give their members a chance to volunteer on the board of directors, the credit union’s activity in your local community may also be important to you. Switching banking service providers is a big decision. Answering these questions will help you to shop for the best choice for you.