Credit unions 101: Everything you need to know to flee the big banks

Credit unions: where the 99 percent doesn't mean your interest rate?

This Saturday is the “money talks” day in the world of financial protest. The bank situation’s going hay-wire, the question “fee or not to fee” has us all glued to our account screens digging for hidden charges. Something’s got to give. And by something, we mean it’s time to move your money. At least that’s what members of a national movement would have us do this Saturday on the new occupier-related anti-bank holiday Bank Transfer Day. The point: to get us to remove our money from for-profit banks and stow it safely in the country’s neighborly non-profit credit unions. Sounds like a plan. But first, just to be safe, let’s go over some credit-union ins and outs, before you move your funds out and in.

WHAT ARE CREDIT UNIONS?
According to the World Council of Credit Unions: “Member-owned, not-for-profit financial cooperatives that provide savings, credit and other financial services to their members. Membership is based on a common bond, a linkage shared by savers and borrowers who belong to a specific community, organization, religion or place of employment.” Basically they’re co-op banks open to specific groups of people.

Yes, “member-owned” has a nice ring to it — no monolithic Wall St. institutions here, nor multi-nationals playing with your savings from HQ in North Carolina.

So are credit unions our knights in shining armor in this time of financial-system tumult? Maybe, but knights can still get sick, armor can get a few chinks. Here’s a run-down of credit union pros & cons, what’s here in Brooklyn and what to keep in mind if you’re considering the switch (taken from many trusty credit-union resources).

PROS:
Not too big to fail:
 Why is this a good thing? Beacuse if there’s no chance of Uncle Sam swooping in to save the day, credit unions will be pretty darn careful with their risks, and with your cash.

Non-profit status: Unlike regular, for-profit banks, which answer to profit-seeking share-holders and to the ever-present bottom line, credit unions exist to please and serve one group and one group only: the customers. As such, with profit out of the picture, there’s a little more money around for (and fewer barriers to) providing things like these:

Good customer service: Everyone’s an owner, so who’s gonna leave their boss on hold?

Good interest rates, low fees: Costs are generally kept low and the savings passed on to the members.

Flexibility with loans: This ties-in with the customer service. Credit unions tend to work harder to get their members the loans they need. They have no reason not to.

CONS:
Fewer branches & ATMs
: Smaller institutions, fewer resources. Though these days, most credit unions have online portals, and many CUs have been known to join forces and create large no-surcharge networks of ATMs, which means you can still easily access your money.

No FDIC insurance: A seemingly big “con,” but it’s mitigated by the fact that all federal credit unions are insured by the National Credit Union Administration for member deposits up to $250,000. From what we’ve read, this is as good as FDIC. But, still, do your research.

Restricted membership: Every credit union is, by nature, restricted to members of a certain group, be it a school, zip code, profession, whatever. There’s no guarantee that you’ll find your match, but lots of groups are super-easy to join (as in pay $10 to join a wildlife society), so chances are you’ll find a way in.

FINDING A LOCAL CREDIT UNION
We have close to 30 credit unions in Brooklyn, running the gamut from the Good Fellowship FCU — open only to certain (lucky) lodge members of the Knights of Pythias — to the Bay Ridge FCU, open to a long, but quite limited, list of folks employed at different car services, churches, dealerships and healthcare companies.

Search through the list looking for one that you qualify for based on your occupation, church, neighborhood or ethnicity. If you work for, say, the Associated Press, as a radio or TV broadcast engineer or are a grad student at CUNY, there’s a union for you. Some, like McGraw-Hill, appear to be open to all.

Even if you don’t qualify for any of the credit unions on the list, that doesn’t mean there isn’t one for you. Take stock of your affiliations, present and past, those located elsewhere (alma mater, maybe?), and see what they have to offer by searching under the “advanced” tab on this credit union finder. Even geographically distant CUs may be part of one of  many huge ATM networks that reach far and wide.

HOW TO MAKE THE SWITCH
Finally, transferring your life’s (month’s, week’s, whatever) savings is no small matter, so you want to be safe and do it right. Here are a few tips from the handy site Consumerist on steps to take when moving your funds:

1) Open your new account with a small deposit before you close your old account. This makes for an easy electronic transfer of the rest of your money between the two.
2) Keep track of all auto-payments from your old account. Make sure you leave enough money there to cover bills, etc. during the transition.
3) Remember to actually change your account with your employer, etc.
4) Leave a small amount of money in your old account for a full month after you open the new one, to cover any auto-payments you forgot about.
5) Once all your funds are transferred to the new account, remember to close the old one (that’s the whole point, remember?). Be sure to get written confirmation.

The Consumerist article expands on this, along with a helpful video.

So there you have credit unions in a nutshell. If you are leaning toward taking the plunge, first do your due diligence (much more here on the differences between CUs and banks) and second… here’s a list of credit-union joining promotions around the country in honor of Saturday’s big day.

For those of you that have already switched, which credit union do you use? What’s the experience like? Tell us below!

Follow Jonathan: @jbberk.

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