banking

Pros and cons of credit unions

 

Where do you put your hard-earned money ... in a large bank, local community bank or a credit union? Seems like a relatively simple question, but you need to think about which will serve you best in terms of fees, interest rates and customer service.

There are lots of positives and negatives when considering where to keep your money. There's a big push right now to put your money in smaller, more intimate community banks and credit unions.

The positives weigh heavily in favor of community banks and credit unions -- as these are the places where you'll usually find better interest rates on everything from credit cards and savings accounts to money market accounts and CDs.

And when you're talking about fees and balance requirements, community banks and credit unions win over national banks as well.

Allan M. Prindle, President/Chief Executive Officer, Power Financial Credit Union: The good story with credit unions is essentially it's more of a conservative business model. So a lot of this economic crisis has not impacted credit unions as much as the large banks we all hear about. So, pretty much they stick to their knitting, and they're more plain vanilla, which may have been more conservative and not looked upon as advanced as banks many years ago. But now that things have turned around, that conservative business model has paid off and safety and soundness is a good issue for us to kind of push and be proud of.

Now, large national banks have a leg up when it comes to other features -- like convenience. You'll find more ATMs and bank branches from larger banks than you will from your typical community bank or credit union. Large banks also come with a few more bells and whistles ... in the form of longer service hours and 24-hour call centers. But unlike credit unions, banks have no caps on credit card interest rates and loan fees.

Greg McBride, CFA, Senior Financial Analyst, Bankrate.com: It's important to shop around to make sure you're getting the best deal. There's not a one-size-fits-all answer for everyone. The other thing to keep in mind is that it pays to be a free-agent. You may have your checking account at your local bank or credit union, but you may have an online savings account with an online bank located in a different part of the country. And by linking those accounts up you really get the best of both worlds. Convenience of local branch and ATM access, but higher yields on you savings accounts with another institution.

Overall, all three options are good, because they're backed by federal deposit insurance ... so your money is insured for up to $250,000 until at least December 31, 2013. Now, you just have to decide which feature appeals to you the most. To learn more and to check rates on a variety of products, visit Bankrate.com. I'm Kristin Arnold.

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