Credit Unions Offer Better Rates and Lower Fees
Why Can a Credit Union Offer Lower Rates and Fees?
Credit unions can offer higher savings rates, lower interest on loans, and minimal fees because they operate as a not-for-profit. A credit union’s focus is on serving its members, not on the needs of shareholders and the drive to make profits as traditional banks do.
Do You Need a Minimum Balance at a Credit Union?
To open an account at a credit union, you’ll need to become a member first. Membership in a credit union means you are part owner, have the right to vote, and have a say in how your credit union is run. A low deposit of $5 to $25 is typically needed to keep your account open.
Since credit unions operate by membership, members must maintain this balance. If it falls below the initial deposit, you may risk having it closed or membership revoked.
Checking Account and Share Account Fees
Credit unions call savings and checking accounts share accounts. Opening a share account may take as little as five dollars. When you open an account, it creates your share of ownership in the credit union. Once you’re a member, you can apply for savings, checking accounts, credit cards, loans, and more.
Many credit unions offer checking accounts with no minimum balance or monthly service fees. On the other hand, a bank’s primary goal is to increase profits for shareholders, and an easy way to do this is through fees. Credit unions will have various checking and savings accounts; check with your representative for all the benefits a checking account can offer.
Credit Unions and Overdraft Fees
Most credit unions do charge overdraft fees. An overdraft fee is when a member has made a purchase that exceeds what is in the account. The credit union will cover the purchase, but an overdraft fee is attached. Average overdraft fees at credit unions are less than at traditional banks. Some credit unions have announced they are no longer charging overdraft fees. When searching for a credit union, be sure to discuss this fee with a credit union representative.
Credit Union ATM Fees
Members of credit unions will avoid ATM fees by using their in-network ATM. Members have access to over 30,0000 surcharge-free ATMs with a nationwide network. Additionally, if you’re far away from your home credit union, you can visit any branch that’s part of the shared network and conduct basic banking tasks. If a member uses an out-of-network ATM, a fee is charged. Fees can range between $1 to $5. Additionally, the out-of-network ATM owner may also add a charge.
Loan and Mortgage Rates
Credit unions can provide members with lower loan and mortgage rates because their focus is not on growing profits for shareholders. Interest rates will vary between credit unions, and your credit score will also have a determining factor. Find a local credit union to learn more about personal and home mortgage loans.
Credit unions have a long history and well-deserved reputation for offering low to zero fees on financial services such as checking and saving accounts and ATM usage fees. Being a credit union member, you can receive added perks of financial education, workshops, excellent rates on auto and other loans. Finding a credit union isn’t tricky, and eligibility can be wide and varied.