Editorial Policy

Credit Unions Aren’t for Everyone

Allie Johnson

March 1, 2013

My husband and I are credit union turncoats.

When big banks began toying with debit card fees in 2011, “Switch to a credit union!” was grassroots activists’ battle cry. We once made the switch, too. But a little more than a year later, we found that our friendly credit union was, well, not so friendly to our financial needs. So we moved again, this time to a fairly big regional bank. Here’s why:

  • The credit union we were with had a very primitive online banking system, and I actually had to call by phone to make transfers between accounts. The credit union offered great in-person service, but we like to handle financial tasks quickly and online.
  • The credit union limited us to two checking accounts between the two of us. We wanted a joint account, a debt repayment account and an individual account for each of us.
  • And, finally, they just didn’t have enough ATMs in the region. We had plans to travel around the South, and we wanted to know there would be fee-free ATMs if we were out of town.

Of course, every institution is different, so the issues with our particular credit union might not apply to another one. But I think it’s helpful to take a look at, in general, some of the pluses and minuses of credit unions and banks.

The advantages of credit unions:

1)      More personal customer service. They’re member-owned, so they focus on providing personalized service for members. The credit union we belonged to always had several staff members at the door to greet members, and they always offered us coffee, water or hot chocolate.

2)      Lower interest rates. Credit unions tend to offer lower interest rates. For example, in March 2012, the National Credit Union Administration reported an average credit card interest rate of 11.65 percent for credit unions compared with 13.69 for banks. For a 36-month loan for a 2-year-old car, credit unions had an average interest rate of 3.35 percent, compared with 5.32 percent for banks.

3)      Lower fees. Credit unions usually charge lower fees, or fewer fees, than big banks. Consumers who are wary of being nickeled and dimed might turn to credit unions.

The advantages of banks:

1)      Better online banking. Of course, it depends on the bank. But, in general, bigger banks have the resources to develop and maintain more sophisticated online banking systems.

2)      A bigger network of ATMs. If you travel a lot all over the country and tend to withdraw cash from ATMs while on trips, you might want to look for a big national bank so you have easier access to ATMs. If you travel more in your state or region, a regional bank could work fine.

In general, I’m pretty happy with our decision to go with the mid-sized bank we chose. But if I found a great credit union that was a better fit, or if our needs changed, I’d definitely consider switching back.