by Ilyce Glink
In an effort to save money on fees and support local institutions, millions of Americans—96 million to be precise—are turning to credit unions for their banking needs. Roughly 700,000 people joined credit unions in the first quarter of 2013 alone.
Like banks, credit unions offer checking accounts, make loans, and have ATM and online access. But credit unions are not-for-profit organizations that exist to serve their members rather than to maximize corporate profits.
“Credit unions are very unique institutions because we’re owned by our member-owners. What’s different from a bank is that there are no shareholders at credit unions,” says Paul Gentile, executive vice president of the Credit Union National Association, a trade association for the credit union system. “That means the credit union doesn’t have to try to drive high profits to raise shareholder value or to have a strong stock price.”
“That’s a powerful proposition today,” Gentile believes. “At a credit union, the money goes back to the membership in better rates and lower fees.”
Switching to a credit union doesn’t need to be an all-or-nothing proposition, says Greg McBride, senior financial analyst for Bankrate.com. “We’re not talking about severing a relationship completely with your existing financial institution,” he says. “You can often get the most bang for your buck by having a checking account at a credit union or local bank where the account is free and having your savings account with an online bank where you can get a better return. You can utilize the advantages of both and avoid any disadvantages.”continue reading »