Why do credit unions offer great rates?

Dear Dr. Don,
Why are credit union loan rates lower and savings rates higher than those offered by a typical bank? Should Americans look to credit unions more now that the federal funds rate is even lower? How can I find and join a credit union?
-- JaiVon Journey

Dear JaiVon,
Credit unions are owned by their membership, so the break in the lending rate and the bump in the savings yield relate to the benefits of ownership. Members of a credit union share something in common, such as a profession, workplace or locale.

The Credit Union National Association, or CUNA, has a credit union locator that lets you search by either location or possible ties to the membership of a credit union. Or you could search for credit union savings rates.

I don't think that the targeted federal funds rate is a motivating factor for Americans to seek out a credit union that they're eligible to join. If you like the loan rates, deposit yields or community feel of a credit union, there's never a bad time to become a member.

It's important to note that shares (equivalent to bank "deposits") insured through the National Credit Union Share Insurance Fund carry the same full faith and credit pledge of the United States government as deposits insured through the Federal Deposit Insurance Corp. The two insurance funds also have similar limits on insurance.


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