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 0.30%
$10K MMA 0.28%
6 month CD 0.39%
1 yr CD 0.64%
5 yr CD 1.31%

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 fixed3.88%3.84%
15 yr fixed3.09%3.05%
5/1 ARM3.23%3.20%
30 yr refi3.86%3.82%
15 yr refi3.09%3.04%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 21,012.42 74.51 0.36%
Nasdaq 6,163.02 24.31 0.40%
S&P 500 2,404.39 5.97 0.25%
Treasuries 2.27 -0.02 -0.83%
Data as of 1:22am ET
Company Price Change % Change
Bank of America Corp... 23.36 -0.03 -0.13%
General Electric Co 27.83 -0.45 -1.59%
Ford Motor Co 10.96 -0.09 -0.81%
Advanced Micro Devic... 10.89 0.00 0.00%
Chesapeake Energy Co... 5.55 -0.12 -2.12%
Data as of May 24

Sections

Starbucks executive chairman Howard Schultz says that male executives must be vulnerable to be great leaders. More

Blue Cross and Blue Shield of Kansas City is exiting Obamacare in 2018, possibly leaving nearly 19,000 Missouri residents without coverage option next year. More

Analysts at Morgan Stanley estimate that Waymo -- the self-driving car startup that is owned by Google parent Alphabet -- could be worth $70 billion. It seems like a stretch given that Waymo is unlikely to be profitable until 2022. More

Want to keep more of your money? Do these five things -- each of which takes 20 minutes or less -- so you can cut your spending and fatten your pocketbook. More