Banks are ripping us off. They give us loans designed to cause us to default. They send our economy into a deep recession, make us lose our jobs, and then ask us for a bailout. A month ago, they even tried to charge us a $5 monthly fee just to use a debit card.
It’s no wonder that people are mad at banks! Some patriots are even mailing credit card offers back to banks, or even mailing back wood in business reply mails, so that banks have to pay the business reply mailing fee. Hard-hit cities and universities are considering divesting their money from banks and moving it to credit unions.
Anger at banks and desire to save money online has lead Americans across the country to ditch their banks and put their money into credit unions, which are non-profit organizations that store money like banks and offer lower interest rates and better credit cards. They also invest in local economies instead of gambling in derivative swaps, so in some ways they’re more like actual banks than modern banks.
However, you need to prepare for the switch before you join a credit union and do your homework just like if you were switching to a bank. That is why I am sharing three things you need to do before you switch.
Get a credit report
Getting a credit report before you join a credit union is not as important as it is before you sign up for a bank. This is because banks will try to give people with bad credit subprime mortgages, credit cards with bad interest rates, and other schemes to ensnare people into long-term debt.
Save money by joining a credit union
On the other hand, credit unions have no interest in getting people to owe them money in perpetuity since that would be akin to scamming themselves (notice how I use the word “join” for a credit union, and “sign up” for a bank). Furthermore, they are not getting bailed out by government money, so they have to be more careful who they lend money to, and thus they do credit checks at least as thoroughly as banks. However, they also know that since they make loans with lower interest rates and don’t jack up rates after five years that people who normally couldn’t pay off a bank loan are able to pay off their loans. Getting a credit report can help you know what to expect when you walk into the office to join.
Research multiple credit unions
Most credit unions are restricted to local areas. Some are further restricted to people in a certain profession in that area, such as firefighters, carpenters, and police officers. This means that there might not be many people in the union, so it might not have many branches open.
Withdrawing cash
That could mean that you have to pay a buck or two each time you withdraw cash for an ATM since your credit union might not have very many of its own. To solve this, some unions offer to pay withdraw fees for you. However, you will still probably save money joining a credit union even with these fees taken into account since they give you better returns on savings accounts and lower interest rates on loans than banks.
Set up the new account before transferring your money
This should be pretty obvious, but you don’t have to walk into a credit union with a wad of cash when you create an account. Some of them even let you create an account for as little as $25 so that you can slowly transfer the money at your own leisure. Many now let you create an account online so that you can almost immediately transfer your money electronically from your old bank account to your new credit union account before you close your bank account.
Safety first
Whichever process you choose is up to you, but it’s important to remember why you are putting your money into a bank or a credit union in the first place: You want to keep it safe. The interest on savings is a nice bonus, but the main reason is so that you do not have to keep your money in a trunk underneath your bed. The same concept applies when transferring money: If possible, do not use cash that you carry on your person to create the new account. Transfer the money online using an electronic check, give yourself a wire transfer, or write a paper check from your old account to your new account.
This is a guest post by Murray Newlands. Murray and his company, Influence People, do blogger relations and online marketing consulting for a variety of clients.
We’re in the process of switching from a big bank to our local credit union. We already have an account I just haven’t really been using them. We’re excited about the better rates
Newlyweds on a Budget recently posted..The Biggest Myths about Marriage
Right on! Not only will you get better rates but you can look forward to much better customer srvice and an absence of hidden fees woo hoo!
There is so much truth to this… In Canada, there was a “trust” called Canada Trust which was a leader… with official bank status but with credit union service mentality. Now, they’ve been bought by TD Bank, and are called TD Canada Trust… and they have the benefits of big bank resources with the trust mentality of service still. And they’ve expanded now to the US – even Jim Cramer talked about them last week in positive light.
Doctor Stock recently posted..Best Stock Picks Part 1
Ah very nice! That could be a real benefit for you. It’s so refreshing to see credit unions care about their customers. It’s shocking that big banks are still thriving, hurray for small business!
I am not sticking up for the banks, however you need to take some responsibility in this. No one is forcing you to stay with the bank! Are you expecting banks to manage your finances? The bank tells you their terms and you decide whether it works or not for you. That is the way it is supposed to happen.
Krantcents recently posted..$12K Will Make You Rich
No, I wouldn’t say I expect them to do anything! What I’m saying is that people should take it upon themselves to leave their banks and join credit unions.
Jon,
This is a great article. I only bank with two credit unions. One locally and then BECU in WA. Between the auto pay features for bills and the no ATM fees you cant beat it…. They are simply not out to take your money!
Thank the guest posted Jeff! It really was a great article. There is something to be said about a non-profit credit union. Customers first, not the other way around