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Ditch your bank for a credit union
Liz Pulliam Weston
MSN
Wednesday, September 8, 2010
A lot of you are really and truly sick of your banks.
You’re sick of getting socked with fees, or tripped by hidden penalties, or earning lousy interest rates. You’re tired of being treated like a nuisance rather than a customer. And yet you have little hope that the bank down the street is any better.
But who says you have to settle for a bank? Relief could be as close as the nearest credit union.
Because so many people are fuzzy about the differences between banks and credit unions, I’ll highlight the three most important distinctions:
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- Credit unions are member-owned. If you have an account at a credit union, you’re a part owner in the enterprise. That may not entitle you to use the executive washroom — your CU probably doesn’t even have an executive washroom — but you’re likely to be seen as a person rather than as a “cost center.”
- Credit unions are not-for-profit. This status helps explain why interest rates tend to be significantly better, and fees fewer and smaller, at credit unions than at banks. Any profits credit unions do make are distributed as dividends to their members. Contrast that with banks, which continually invent new fees and policies to boost profits (and to pay those stunning executive salaries).
- Banks hate — hate – credit unions. President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934 to “promote thrift and thwart usury,” and banks have been gunning for them pretty much ever since.
Because of their not-for-profit, cooperative structures, credit unions are exempted from most state and federal taxes. Banks have convinced themselves this is an unfair advantage and have spent a lot of effort, plus a fortune in lobbying fees, trying to legislate credit unions out of existence, or at least limit who can join. (I guess they thought the money was better spent there than on, say, improving their interest rates, reducing their fees or slashing their telephone hold times.)
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