The Wall Street Journal recently carried an article titled “Credit Unions: a Cheaper Banking Option.” This article deals with the fact that credit unions typically have lower rates on loans and often have better deals on savings and checking accounts than other banking institutions. Even though that may be the case, in today’s world of super low interest rates, it’s close to impossible to earn much of anything in the way of interest on a checking or savings account.
So how does the credit union compare with your local corner bank? Not only does the credit union pay a bit more on your savings account, with an average of 0.75% at the credit union versus 0.42% at the bank on a one-year CD, they also tend to have lower charges for their services. For example, the out of network ATM charge averages 99 cents at the credit union, while averaging $1.41 at the bank.
- Call up your local credit union and ask what rate they are charging on new auto loans and on home equity lines. Now call up a local bank and ask the same question. Are these numbers the same, which is cheaper, why do you think that is the case? Be prepared to discuss this in class.
- What qualifications do you need to become a member of your local credit union?
- Find at least one credit union that you can join.