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Five Reasons Choosing A Credit Union Can Be A Smart Idea

Credit unions are nonprofit financial cooperatives that are owned and operated by their members. That means they don’t have stockholders demanding that they maximize profits, so their earnings are passed along to member-owners rather than going to outside investors. They emphasize customer service, which many big banks have reduced to bring down costs. They also provide financial services to their members with low fees and low loan rates, along with higher interest rates on deposit accounts than traditional banks can offer.

Years ago, you had to be an employee of a certain company or a member of a specific group of people, such as the military, to join a credit union. Over the years, though, membership eligibility has broadened at all credit unions. Some credit unions, like Sandia Laboratory Federal Credit Union, draw members from hundreds of businesses, community groups and places of worship.

Here are five reasons to consider a credit union.

1. Rates
Often the first loan you’ll take out is a car loan. Car loans at credit unions generally have much lower rates than those at big banks. For example, the average national rate for new and used car loans issued by credit unions in 2015 was more than 2 percentage points below those issued by banks, according to an analysis done by the National Credit Union Administration, a federal regulatory agency. The same holds true with mortgages, home equity loans, student loans and personal loans, all of which tend to have lower interest rates than what traditional banks charge.

Interest rates on deposits in savings accounts , money markets and IRAs also tend to earn higher rates than big banks.

2. Fees
A common drawback of checking accounts at banks is fees: monthly maintenance fee, overdraft fee, minimum balance fee. Basic checking accounts at most credit unions have low to no balance minimums and most have no monthly fees. If you overdraw your account, the fee will most likely be less than a bank would charge.

3. Convenience
Many credit unions belong to a nationwide network of branches and ATMs, such as the CO-OP network. Even if you’re traveling, you can generally find an ATM in the network .

In the past few years, credit unions have invested heavily in mobile and online services to make banking easier for their members. The popular features that big banks offer through apps are usually available from credit unions, even mobile deposit , so you can avoid making specific trips to a branch just to deposit a check. You can usually locate a network ATM, transfer money, set alerts for low balances, and pay bills through credit union banking apps. Many are also adding mobile payment platforms to enable you to make payments from your smartphone.

4. Financial education
Many credit unions also offer savings accounts created specifically for children and teens along with tools and resources to help their members learn about money at every stage of their financial life. For example, SLFCU has created the Savings Laboratory for children 12 and under, where children can deposit money into their first savings account for prizes, and access resources and games that teach the basics of money management.

As those children get older, they can learn about checking accounts, credit cards and college savings. As they mature into young adults, credit unions can help them understand credit scores, buying a first car, and managing credit wisely. They can even help when a young adult wants to consolidate student loans.

5. Community involvement
Finally, a credit union is deeply involved in its community. As a business, it helps members throughout their financial lives. As a citizen, it supports local causes and charities by providing staff volunteers and sponsorships. Lending also plays a role in helping to develop small businesses within the community.

If you haven’t considered banking with a credit union, consider the above information when comparing your current financial institution.

Ellen Cannon, NerdWallet

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