credit unions

Credit unions help young savers start

Comparing credit union, bank fees
Average feeCredit unionsBanks
Checking NSF$20$30
Credit Card late fee$25$39
Mortgage origination$1,500$2,982
Source: Credit Union National Association

Some young people may choose banks over credit unions because they want to make sure their deposits are insured by the Federal Deposit Insurance Corp Corporation. However, credit union deposits also are insured.

The National Credit Union Share Insurance Fund insures deposits up to $100,000 for individual accounts and $250,000 for individual retirement accounts.

Young adults and choices

Younger customers place more weight on certain factors when selecting a financial institution, says Josh Jones, manager of young-adult programs at CUNA.

For example, young adults are especially interested in online banking options and conveniences such as ATM availability and mobile banking.

Many -- although not all -- credit unions offer these conveniences valued most by young adults. CUNA's 2008 Technology and Spending Report shows the following:

Cutting-edge credit union services
  • 68 percent offer an Internet banking service.
  • 49 percent offer an electronic bill payment service. Of those, 25 percent charge a fee for EBP service. The average monthly fee is $4.58.

To compete with some of the larger national banks, many credit unions are part of a nationwide system of 25,000 surcharge-free ATMs, Jones says. Credit unions are less apt to charge for foreign ATM services, he says.

Nikki Dougherty, 35, of Wilmington, Del., joined a credit union five years ago because she was tired of paying a monthly fee on her checking account at her bank.

"Whenever the account went below a certain balance, I paid $10," says Dougherty, who works as a sales associate at a home improvement/hardware store.

Her credit union doesn't charge a minimum balance fee and she's been happy with the customer service and product offerings.

"Overall, I'm satisfied," she says.

Possible downside

While credit unions are often a great choice for young adults, they aren't perfect.

The biggest disadvantage of credit unions is that membership is not open to everybody.

Typically, people are eligible to join a credit union through their workplace or an organization to which they belong. In some cases, residence in a specific county or city may make you eligible for credit union membership.

Credit unions also may compare unfavorably to for-profit banks in some ways. For example, credit unions may not offer sophisticated services such as online banking and may have reduced hours of operation. Many small- to moderate-sized credit unions also do not have an after-hours or 24-hour call center.

Because they try to keep their customer fees and expenses low, credit unions typically do not have the financial resources to offer cutting-edge technologies and services, Rangan says.

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"Credit Unions unions often have an inability to make quick changes in today's rapidly changing environment," Rangan says.

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