Bye-Bye, Banks: 9 Tips Before You Switch to a Credit Union
Thousands are leaving banks, but you need to know where to put your money.
Oct. 24, 2011 — -- The more than 7,000 credit unions across the country are seeing an explosion in new members since Bank of America announced its monthly $5 debit fee in September.
In Miami, Karen Jackson transferred her money from a Chase account to the Miami-Dade Credit Union. She said the continuous adding on of fees had disgusted her.
"We couldn't take it anymore," she said. Recent numbers show there are thousands like her.
The Navy Federal Credit Union, the world's largest credit union with $46 billion in assets and 3.8 million members, says it welcomed thousands of new customers last week -- a threefold spike in new checking accounts since this time last year.
"In our experience, this is new," Karen Tyson, the National Association of Federal Credit Unions' senior vice president for marketing and communications, told ABC News. "This is a different phenomenon. There seems to be quite a bit of distrust, quite a bit of apprehension, quite a bit of frustration among the average Americans out there with the larger institutions and the Wall Street institutions."
Scott Arney, the chief executive officer of the Chicago Patrolmen's Federal Credit Union, said deposits had been pouring in.
"In October, we're on pace to go about 40 percent above that in new checking account and debit card activity," Arney said.
But before you go out and transfer your money to a credit union, here are nine tips from the Credit Union National Association:
Find a credit union you're eligible to join. Credit unions serve people according to where they work, where they live or worship, or other associations they might belong to.
Use these tools to find a credit union. These sites -- www.aSmarterChoice.org and www.CULookup.com -- help you find out what you need to know.
Compare credit union rates and fees to those of banks. The Credit Union National Association estimates that consumers annually save more than $6 billion in better rates and lower fees by using a credit unions rather than banks.
Ask about free checking and debit. About 80 percent of credit unions still offer free checking, and more than 70 percent have debit card programs, typically with no fees, according to the Credit Union National Association.
Check if the credit union has all the products you're looking for. These days many credit unions offer most of the same services and products you'd find at a bank -- mortgages, credit cards, IRAs, home equity lines, even small business loans.
Consider the convenience factor. Credit unions have fewer branches, but today thousands of credit unions share their branch facilities, so that members of one credit union can use the shared branch networks of other credit unions. And today many credit unions are part of nationwide ATM networks.
Ask about deposit insurance. Nearly all of the 7,500 credit unions in the U.S. are federally insured, meaning their deposits are insured up to $250,000 by a federal deposit insurance fund administered by the National Credit Union Administration, just as the FDIC does for banks.
What about electronic services? Credit unions pioneered the concept of direct payroll deposit. But today many credit unions offer a range of electronic banking services.
Ask for a "switch kit": Many credit unions have switch kits, a compilation of all of the forms, rules and suggestions you may need to make your switch as seamless as possible. Just ask the credit union you want to join for its switch kit.
The National Association of Federal Credit Unions' Tyson said the main myth she hoped to dispel was that it was hard to move from banks to credit unions.
"It's not hard to change," she said. "It's a quick process. You can do it online. Find one that works for you. ... It's a piece of cake."