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 0.40%
$10K MMA 0.35%
6 month CD 0.39%
1 yr CD 0.70%
5 yr CD 1.55%

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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%4.08%
15 yr fixed3.09%3.11%
5/1 ARM3.20%3.22%
30 yr refi4.06%4.16%
15 yr refi3.17%3.20%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of 3:38am ET
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

The Obama administration is touting that its immigration action will boost wages. But the hike amounts to only $170 a year by 2024. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.