Own your own bank -- join a credit union
By Bankrate.com

One in every three Americans belongs to a credit union -- that's more than 79 million people who belong to one of 10,000 credit unions with more than $480 billion in collective assets. So what do they know that you don't know?

"When it comes to personal attention, high-quality service and low fees, credit unions continue to knock the socks off other providers in the financial services marketplace," says Daniel A. Mica, president and CEO of Credit Union National Association. Americans seem to agree. Credit unions have topped the consumer satisfaction ratings in American Banker's annual survey for 12 years in a row.

Arthur Bullard agrees. Bullard joined First Choice Credit Union in West Palm Beach, Fla., when he first started working at the post office. Thirty-three years later, he's still a member.

"Personal touch is everything to me," says Bullard. He's been so happy with his service over the years that he's recruited several of his friends and family members to join. He says the employees at First Choice are the reason for his enthusiasm. "They make you feel that they are there to get you a better deal," Bullard says.

In the beginning -- a problem of convenience
The first American credit union was founded in 1909 in Manchester, N.H. Credit unions have prospered since then, but their popularity was limited due to convenience -- they couldn't offer as many branch locations, and, in more recent times, as many automated teller machines as the bigger banks.

With the dawn of online banking, all that has changed. Access to a credit union is now as convenient as the nearest computer.

Credit unions have started to solve the lack-of-ATM problem by joining networks. While paying a non-credit-union service charge at ATMs was a problem in the past for USAA Federal Credit Union members, they can now use any of 101,000 Pulse ATMs across the country free of charge.

Bullard says his credit union is actually more convenient than traditional banks. "You get business done a lot quicker and you get better rates," says Bullard, citing a CD he recently purchased at 4 percent.

Bucks get bigger
Because credit unions are nonprofit, they can offer lower rates for loans and lower fees overall.

"Typically, we see what banks are doing and we try to do a little bit better," says Michael Welte, President and CEO of First Choice Credit Union.

This puts banks, which have to pay profits to stockholders, at a disadvantage. Instead of paying stockholders, credit unions return earnings to their members in the form of dividends or improved services. Lower overhead means lower rates.

"The single biggest difference between a bank and a credit union is the ownership structure," says Welte. "Banks are either privately owned or public companies. Therefore, their primary function is to earn profits for their owners. (In credit unions) net income is earned only to the extent necessary to build sufficient capital reserves. Earnings over and above this are returned to members through adjustments to loan and savings rates or expansion of services."

"It's in a person's best interest to join a credit union," says Welte. "They get a better overall financial deal than from a bank." Currently, the better deal at Welte's credit union is on Gold credit cards. First Choice's going APR is 10.90 percent. Compare that to the national average of 14.71 percent. For those who carry a balance on their cards, that's quite a bit of savings.

"People are worth more than their money at credit unions," says Mica. And their money is worth more at their credit unions than at a traditional bank.

Over the years, credit unions have consistently charged lower rates for loans and credit cards and been more lenient with fees and penalties. For example, if you were shopping for a new car loan, you would pay no fees at Greater Texas Federal Credit Union, Pentagon Federal Credit Union, San Antonio Teachers Credit Union and Provident Central Credit Union.

Bullard says his credit union has saved him a lot of money in the past 33 years. When he was buying a car, they helped him research his deal to make sure he got the best offer available. When he wanted to refinance his mortgage, "They told me about options I didn't even know of. They give advice to save you money."

Bullard cited one more reason he is so dedicated to his credit union -- security.

"They know my name and face," he says. "If someone came up to the counter and said they were me, had my personal information and wanted to get my money, the teller would know 'That's not Mr. Bullard.'" Bullard says he knows there are other security measures in place, but he feels safer knowing that the tellers know him.

So what's the catch?
Ah, yes -- there's always a catch. To join a credit union, you must be eligible for membership. Luckily, there are so many credit unions from which to pick, almost anyone is eligible for at least one. Membership requirements range from military service to place of employment and school attended to current place of residence. You can find the right credit union for you at the National Credit Union Administration Web site.

If all else fails (and it really shouldn't), you can learn how to start your own credit union by reading Bankrate.com's 10 steps to starting your own credit union.

-- Updated: Jan. 29, 2003