Warm fuzzy feelings?
October 14, 2011 2:58 PM   Subscribe

Why should I transfer my savings account to a credit union?

My local credit union only offer a few basis points above the large, publicly traded regional bank that I'm a customer of. They're not big enough to participate in the normal branch banking network. They advertise no fee checking, but I don't pay fees with my current bank.

I thought some of the appeal was that credit unions cut out some middlemen. If a credit union's sole attraction is low loan rates for members, I can't figure out where they find enough members with money to take up the lending half of the equation.
posted by pwnguin to Work & Money (24 answers total) 5 users marked this as a favorite
They're member owned, so their profits aren't going to some multinational. They support a lot more community investment and in general seem to be more civic minded, probably because they don't have to please shareholders. And when you need a loan, they're more likely to give you a better rate, especially if you're already a customer in good standing.
posted by small_ruminant at 3:14 PM on October 14, 2011

Best answer: Why we changed to a credit union is for more hands-on service, and treated less squeeze-blood-from-a-stone like the big banks have.

For example, when I tried opening a savings account with my nationwide bank, they declined me due to poor credit history. Same with two other for-profit banks.

The credit union, however, let me open up a savings account, no questions asked, and then we used a portion of our savings to open a secured line of credit (not a credit card, a line of credit - we have to go down to the CU to get money out). Credit and no-fee savings ans no-fee checking, no problem at the credit union.

The reason the credit union was happy to accept us was because we were bringing a bunch of cash into the system. OK, not a huge amount, but more than we were going to take out. Even though we haven't used the secured loan yet, that money is locked in. When we discussed the future with the credit union, they made it clear that they're about the relationship, and a right-side up method of having cash on hand and lending appropriately. They can be more flexible with members, because members have skin in the game, and the CU has a handle on the financial foundation of savings and lending.

The big banks tend to be in it more for the quick buck -- get the credit cards signed up, get their mortgage and car loan and everything but don't encourage savings because interest is money paid out and that's an expense. Big banks can't handle somebody with a poor credit score opening a savings account -- there's no way they can upsell them on overdraft protection or a credit card, because even if the person wanted one they couldn't have it anyway.

So, at least for me, a credit union is less about the number of points I earn on my savings, and more about doing business with a financially-responsible organization who is willing to work with me when I'm behaving financially responsible with my money. That's how they find enough members -- by using the money in a responsible way. I'm sure there's irresponsible credit unions, but that's why you do your research first.
posted by AzraelBrown at 3:19 PM on October 14, 2011 [7 favorites]

Their main attraction is that they aren't fucking Bank of America and won't screw you out of pure spite and greed. I love my credit union.

You can also use any credit union in your area to bank at, in most regions. I don't know if they have the 7-11 machines for credit unions in your area, but I do all my banking at the 711 across the street from my apartment and never actually go into a branch office.
posted by empath at 3:22 PM on October 14, 2011 [7 favorites]

For me, it is about personal service. I have lots of banking issues in my business - contractor and real estate investor.

If you deal with a big bank, you might know the tellers at the local branch - but there are no decision makers at your local branch.

I like to know the people who are making decisions about my loans. They see me - not information that has been gathered about me.
posted by Flood at 3:28 PM on October 14, 2011

I've found a bunch of different benefits to having a credit union over the years although I recently switched to a small local bank and find they have a lot of the same benefits

- real privacy policies - my credit union doesn't carve out the right to spam me within an inch of my life with the personal information I give them
- personal service - once I paid a credit card bill late due to some fuckup on my part. I called and explained and they were super nice and waived the fees and it didn't wind up dinging my credit rating
- lots of member services - depends if you have a branch near you but mine would have a lot of local classifieds and car ads and that sort of thing for members.
- user-owned - if you have an issue with something there are mechanisms where you can bring it up. My credit union went through a website redesign a ways back and recruited members to test it as they were developing it. I wound up hating it and left (I was really not their target audience) but had a lot of really good back and forth conversations with the guy who was in charge of the project.
- loans - it's much easier to get loans at decent rates from credit unions, I've found
- network - usually you can use ANY credit union ATM fee-free anywhere. This is useful
- you are not a number - I never had my credit union shut down my credit card when I was traveling because me spending money in a neighboring state flipped some switch somewhere. This happened a lot with my other cards.
- karma - I feel that if there are two options that are basically the same moneywise and one of them is an evil corporate empire and one is a locally owned business giving money back to the community, all things being equal, I'd go with the latter option. This may be woo woo on my part, but as a guiding principle, it works for me. Consult your own moral compass.
posted by jessamyn at 3:34 PM on October 14, 2011 [8 favorites]

Here are two benefits my CU provides you would never find at a big bank, besides the ones mentioned above.
When I use my card to make purchases, they use a small percentage of that and pay me back once a year. Some goes to me, some goes to one of a few local charities I can choose
The other benefit is my favorite, Our mortgage is through them, and once a year we get money as a percentage of the profits to the CU. Love!
posted by annsunny at 4:06 PM on October 14, 2011

for me, decentralization. Which means my private banking information is spread over a limited area. One system, on geographical location.
posted by edgeways at 4:08 PM on October 14, 2011

For the same reason you would shop at the local hardware store down the street rather than driving to Home Depot. It's about being part of your community. Look across your country at what has happened to the downtown of any smaller city or town. That rot is caused in a significant part by choosing to give your money to organizations not based near you that have no interest in your community or its well-being, this is your Target, Walmart, McDonald's, etc AND your giant banks.

The choice is pretty simple; continue to endorse giving trillions of bankers or put that money to work in your own community.

Seriously, if you have been paying attention to the news at all in the past 3-4 years and cannot understand why banking at BofA is not such a good idea then BofA is probably the best choice for you. If 20 bank machines within a mile of you is more important than your community then BofA is probably the best choice for you.
posted by Cosine at 4:09 PM on October 14, 2011 [2 favorites]

Best answer: In addition to many benefits mentioned above, I get a little-bitty check at the end of the year each year, because they portion out yearly profits to members, by percentage of total deposits on a certain date. It's small but it makes me happy.

The customer service is also miles above anywhere else I've banked (all corporate places, and many different corporate places). Now that my kids are starting to have kiddie savings accounts, they have better kiddie programs and always have time to talk to my child as if he's a "real" customer (and as if he understands anything they're saying, he's still a toddler but he LOVES going to the bank). Mine is a larger credit union, so I don't know how common this is, but they also have a financial planner available for any members. (Like fee-based -- she doesn't recommend credit union products or get a cut of anything -- except free.)
posted by Eyebrows McGee at 4:11 PM on October 14, 2011

Oh, also -- full company financials available to any member.
posted by Eyebrows McGee at 4:13 PM on October 14, 2011

Best answer: With my CU, quality of service is a huge plus, especially compared to the Big Bank I am also with. Calling them and getting through to a knowledgeable, friendly human very easily is a huge plus for me. They also happen to have really free checking accounts, gave me my first credit card, have better CD rates than anyone else, etc. They had an excellent online banking service years before my Big bank.

I use the Big Bank for local deposits, job stuff, etc. Their web site is a mess and their phone support is appalling, staffed by people who do not know what they are talking about. I use the CU (2000 miles away, 10 year old account by now) for savings. I've had no trouble depositing/withdrawing from them anywhere.
posted by carter at 4:33 PM on October 14, 2011

It looks like, for ATM use at least, that CU is in a small network - click on the 'Free ATM use' and you'll get this page. My CU is similar, although in a bigger network, I get use of almost any Walgreens ATM for some reason as well as the Post Office CU machines, and if I can't find one of those while I'm travelling, I'm probably out of the country. I had a choice of 4-5 CUs, so you may need to look around and see if you're eligible for any others and compare their usability; I ended up getting it down to 2 that had non-horrible online access and then chose the one with slightly better locations.

My 'local bank' got bought out this year, so while it took a while to switch all my accounts, I finalized everything in these past two days. Closed my bank account yesterday, got a check, and walked into my CU this morning and deposited it. The attitude between the two sets of bank tellers was remarkable. The CU people were people, and the bank people tried to sell me a credit card as I was leaving. These are also the people who started putting non-local coupons on my receipts, so good riddance.
posted by cobaltnine at 4:50 PM on October 14, 2011

I've always been with a credit union- my parents signed me up for a bank account at theirs when I was about 10. (This turned out incredibly useful later when I needed points to prove my identity (with living address) )

Anyway, my friend's grandfather had started an account at a regular for her when she was born, and later they went to see what money it had accumulated when she was about 16. It was all gone, eaten up in bank fees. My account at the credit union was a specific child's account until I turned 18. They are just nicer, you know? Not out to suck all your money out of you. They have free transactions and transactions that they have to charge for (because it costs them) but they are very clear about these and actively encourage us to save money.

Another cool thing: I had a bank card, just an ATM card, not able to be used for online purchases. I went in to apply for a credit card, since that is what I thought I needed. They instead talked me into a VISA debit card, which was really responsible of them.

They also are really good at ringing me up when interesting transactions go through (yes, that was me, I'm going on holiday, or yes, I did order that thing.)

They are friendly, their aim is to help me out, and they are great.

They have an agreement with a major bank so that their members can use their ATMs, so I haven't been caught out without an ATM nearby either.
posted by titanium_geek at 7:17 PM on October 14, 2011 [1 favorite]

Check your credit union. It might no longer be as great as everyone says.

My credit union just started charging $5 per month per checking account, no matter what your balance, and they're eliminating the cash-back rewards for the credit card at the end of the year.

The big bank we have another checking account with will give us free checking as long as we meet any one of several requirements that we already meet, but the credit union isn't offering that.

I've been happy with this credit union for 22 years, but it's no longer obvious that it's such a great deal.
posted by Ery at 8:18 PM on October 14, 2011

I get a 3.5% annual return on my checking account balance at my credit union. Never seen any big bank offer anything like that.

Upon opening my account at my credit union, they also offered me a line of credit to consolidate the various cards I had, at nearly 10% lower finance rate, and a higher limit than all three of my other "national brand" cards combined.

And they don't charge me anything for any of their services.
posted by erstwhile at 9:21 PM on October 14, 2011

Response by poster: empath: "Their main attraction is that they aren't fucking Bank of America and won't screw you out of pure spite and greed. I love my credit union."

I guess the subtext of the question is, why is the choice always presented as BofA or credit unions? Apologies for not being clear -- I currently bank with a largish publicly traded for-profit retail regional bank, and just opened an ING Direct account. Been considering the tradeoffs of opening up a credit union account. My current bank isn't BofA. If there's a BofA in town I don't remember seeing it. I'd check their site to make sure, but it seems to be down at the moment =)

My regional bank isn't the devil incarnate. I've never been charged for the privilege of writing a check, or having a checking account. I don't recall them pushing a credit card to me, although I do have a debit card. I earn interest on my checking, though rates are so low it's only worth mentioning to point out that they do in fact pay me rather than vice versa. I've never been charged a foreign ATM fee (on top of the fee the ATM itself charges).

Given that, it's not clear to me why people who own capital will leave their money in a CU for sufficient lengths of time. I mean, as anecdotal data, at least three people on this thread have listed the main benefit of CUs as borrowing from them. I totally get that. But I want to know about the other side of that coin, about the motivations of people who are net lenders to the union.

Eyebrows McGee: "In addition to many benefits mentioned above, I get a little-bitty check at the end of the year each year, because they portion out yearly profits to members, by percentage of total deposits on a certain date. It's small but it makes me happy."

This is an interesting data point. I've been looking at share rate, is it typical to offer annual distributions on top of that? Comparing the CD rates, I suppose many members just hold the minimum in share accounts and invest their spare savings in short term CDs.
posted by pwnguin at 9:23 PM on October 14, 2011

My credit union pays all ATM fees for you. I can walk into any convenience store or bank anywhere and they will reimburse the fee within 1-2 business days. This is awesome.

They also don't charge me fees for anything. When I call their phone number I get a real person, in my zip code, immediately.

Also they didn't have a single goddamn thing to do with the mortgage crisis and they use their profits for scholarship funds and other non-evil things.
posted by bradbane at 9:26 PM on October 14, 2011

"I've been looking at share rate, is it typical to offer annual distributions on top of that?"

I honestly have no idea, but I belong to a credit union and a member-owned mutual insurance agency (for a professional organization) that both give annual distributions. It might be a regional thing, this is the first credit union I've belonged to. :) We get an annual financial statement, a letter from the Board about the direction they're steering the union, and a tiny little distribution from the profits.

"Given that, it's not clear to me why people who own capital will leave their money in a CU for sufficient lengths of time."

I would guess that most people use a combination of institutions; we basically keep our "working cash" and a cushion with the CU, and we have a separate investment account elsewhere.
posted by Eyebrows McGee at 9:41 PM on October 14, 2011

I want to know about the other side of that coin, about the motivations of people who are net lenders to the union.

I want my money to be used by people in my community, who I like. This is served pretty much equally well, to my mind, by my small local bank. That said, I can't get a credit card through my small local bank so I do that via my credit union.

I like being part of a cooperative because that's in line with my values and I feel that supporting that system with my money is important. Ultimately if it's just about the money, you can find better deals elsewhere. For many people, credit unions fulfill needs that aren't just fiscally quantifiable as people have outlined here: service, local focus, local governance, you have a vote. It's like buying local milk vs. the cheaper milk at the gas station. If money is your only concern, you make different choices than if it isn't.

It was super gratifying during the mortgage crisis for me to hear from my bank that they were in no danger because they basically didn't take high-risk-high-return gambles with my money that they hold on to. I appreciated that both in an "in line with my values" way and in a "hey my bank isn't in trouble" way. I have a fair amount of money that I keep in the bank/credit union. I want to be proud of the actions and decisions taken by the people using my money so my choice is clear for me. You may have other priorities.
posted by jessamyn at 2:08 PM on October 15, 2011

Response by poster: Alrighty. Well, I think I'll open one in the future, once my current family credit crisis is over (so next six months-ish). I'll probably dip my toes in with a small amount first and see how things work.

My gut instinct is that small credit unions, as small non-profits, are just run poorly. Credit unions in KC, for example, have been consolidating into some hokey "Mainstreet Credit Union," presumably because they've all run into trouble. You can lend to conforming standards but if the asset price is inflated from cheap loans, you can still find yourself facing losses.

A better solution might be to just invest in the highest return available and donate the extra gains to a local charity. But with both my parents out of work and on food stamps, I have some hyperlocal giving to do first.
posted by pwnguin at 8:01 AM on October 16, 2011

Credit unions in KC, for example, have been consolidating into some hokey "Mainstreet Credit Union," presumably because they've all run into trouble.

Pretty sure that's not true. As near as I can tell this was just part of a rebranding campaign as the Johnson County credit union expanded its membership area to include more than just Johnson County and merged with a CU in Lawrence. You're welcome to bank however you want to, obviously, and if folks in your family are in a situation where every penny counts, a credit union may not be what they need at this time. The Kansas Credit Union Association has a website that you can check out for more information.
posted by jessamyn at 8:41 AM on October 16, 2011

"My gut instinct is that small credit unions, as small non-profits, are just run poorly. "

Not usually. But, as a member, you generally have access to the financials so you can find out!
posted by Eyebrows McGee at 11:09 AM on October 16, 2011

Response by poster: Credit union pays bonus dividend. Interesting that they've chosen to split it 50/50 with debtors.
posted by pwnguin at 7:40 PM on November 11, 2011

A friend just refinanced their house with a local credit union at 3% with no closing costs.

YMMV, and not everything is equal, but things tend to be more clear and open with fewer people involved, fewer levels of bureaucracy and so forth.
posted by edgeways at 9:01 PM on November 11, 2011

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