Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Credit unions duke it out with banks

By Gerri Willis, CNN personal finance editor


NEW YORK (CNN) -- Had it with your bank this year? It's time to start fresh. Continuing with our Financial Resolution series, we'll show you how you can join a local credit union.

Let's first take a look at how they work. Credit unions, unlike banks, are non-profit institutions. For you, that translates into lower fees and better rates. That's because profits tend to go back to members in the form of lower rates and fees rather than going to stockholders.

home_rich_cover.03.jpg
For more information on managing your largest investment, check out Gerri Willis' 'Home Rich,' now in bookstores.
chart_credt_unions.gif
CDs & Money Market
MMA 0.23%
$10K MMA 0.26%
6 month CD 0.34%
1 yr CD 0.54%
5 yr CD 1.26%

Find personalized rates:
 

Rates provided by Bankrate.com.

Credit unions also don't pay taxes, so there's a lower cost of doing business.

But let's look at just what kind of rates you can get from a credit union versus a bank -- from DataTrac -- an independent research firm.

Keep in mind, this isn't a perfect world. Credit unions are just as vulnerable to a bad economy. So far this year, 23 credit unions have failed.

Credit union credit cards are also a bargain. According to a study by Pew Charitable Trusts, interest rates on credit union credit card are 20% lower than bank cards. Over-limit fees are $19 lower than at banks. And penalty interest rates at credit unions are 18% versus 29% at banks. In addition, 25% of credit union cards charge a fee to transfer a balance from another card, compared with 88% of bank cards surveyed.

But that's not to say a credit union credit card is for everyone. Rewards cardholders may prefer the more generous rebates of major bank card issuers.

Becoming a member of a credit union is usually based on where you live, who you work for, what you do for a living, or what religious community you belong to. Credit unions service those in the military, teachers, firefighters, policeman and people who work for specific companies.

To find out if you're eligible to join a credit union, go to creditunion.coop. And make sure the credit union is insured by the National Credit Union Administration -- that's the credit union's equivalent of the FDIC. Your money is insured up to the same limits as with a traditional bank.

-- CNN's Jen Haley contributed to this article.

Talkback: Are you thinking about leaving your bank? To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.63%3.67%
15 yr fixed2.77%2.78%
5/1 ARM2.97%3.05%
30 yr refi3.67%3.71%
15 yr refi2.83%2.84%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,773.64 -57.12 -0.32%
Nasdaq 4,775.36 -29.93 -0.62%
S&P 500 2,065.30 -10.51 -0.51%
Treasuries 1.82 -0.02 -1.03%
Data as of 9:21pm ET
Company Price Change % Change
Bank of America Corp... 14.56 -0.23 -1.56%
Freeport-McMoRan Inc... 14.00 1.34 10.58%
Ford Motor Co 13.56 -0.53 -3.76%
Apple Inc 93.74 -1.09 -1.15%
Microsoft Corp 49.87 -0.03 -0.06%
Data as of Apr 29

Sections

The Oracle of Omaha joked that the impact on Corporate America would not be the biggest problem of a Donald Trump presidency. More

The Dow is down 300 points over the past two days, leaving the index on track for its worst week since early February. Blame fumbled earnings reports from the likes of Apple and Google as well as concerns about the Bank of Japan. More

Now you can watch the SpaceX Falcon 9 rocket land on a barge as if you were standing on the deck of the ship. More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More