Anyone can belong to a credit union, just not the same one. It’s about fit. Unlike banks, credit unions are organized by a common bond, whether it’s where you work, worship or live.
“We are owned by our members, not by stockholders, and our board of directors is made up of volunteers who receive no payment for their stewardship of our members’ finances,” says Suzanne Dusch, vice president of CFE Federal Credit Union in Lake Mary, Fla.
According to the Credit Union National Association, or CUNA, 7,351 credit unions existed in the United States at the end of 2011. When you’re narrowing your choices, you’ll need some guidelines on what you can expect from a credit union checking account.
Convenience means different things to different people, depending on their habits, says Bonnie Doolin, chief operating officer for the Massachusetts Credit Union League in Marlborough, Mass.
“I recommend that a credit union branch be on the flight path of where you conduct your day-to-day business,” Doolin says. “Whether that’s on your way to work, where you shop, where you worship or in your neighborhood doesn’t matter.”
Even if you conduct all your checking account business remotely, before deciding on a credit union, you should at least make an initial in-person visit to a branch.
If you travel frequently, you’ll want to choose a credit union that subscribes to shared branching so that wherever you go, you’ll be able to access your money.
“Shared branching makes small credit unions seem infinitely larger because you can get the same service at any member credit union that you do from your regular one,” says Bruce McClary, spokesman for ClearPoint Credit Counseling Solutions in Seattle.
Shared branching refers to a network of credit unions nationally that share information so credit union members can have thousands of convenient locations to conduct transactions.
You can use their ATMs without incurring a fee and even make transactions and withdraw cash from ATMs in 7-Eleven stores. A teller in another credit union can pull up your account and help you with your transaction, McClary says.
“This is what’s gotten me through a recent move without having to switch credit unions,” McClary says.
Not every credit union belongs to shared branching, so be sure to ask if they do. You can also check online at NCUA.gov or CUServiceCenter.com.
McClary says educational opportunities are abundant. Topics covered include basic budgeting, dealing with debt problems, investing, credit scores, buying a car and housing issues.
“Seminars are offered on site, at other local venues and can be conducted online as webinars, too,” says McClary. “And they are free to members.”
Many credit unions have programs to coach you through saving, reducing debt, saving for short-term and intermediate goals, and investing for retirement, says Shay Olivarria, author of “10 Things College Students Need to Know About Money.”
“Not only will they help you get where you want to be, you’ll understand how you got there and why it’s important to stay there,” Olivarria says.
Credit union employees may conduct the seminars or seek the assistance of a credit counseling agency.
Not all consumers are looking for advanced technology tied to their checking accounts, but many are. Some credit unions have the same technology as big banks and will send a text message to your cell phone when your checking balance is low so you can transfer money to your account. There are also apps for your iPhone, Olivarria says.
“Google the credit union you’re interested in and see what they have to offer in the way of technological advances. See if they have a Facebook page,” says Olivarria.
Also, do they offer online bill paying, direct deposit and online statements? And can you take one of their education courses online?
“Even though, in general, credit unions are smaller than banks, stability is not relevant to size,” McClary says.
Credit unions have a stronger relationship with their customers, which makes a good case for credit unions staying in business.
Ask how long your credit union has been up and running and how it manages investments, and verify that it is growing responsibly.
“Measured growth is a sign of stability and profitability,” says McClary. “They shouldn’t be branching out so quickly that they can’t effectively service the customers they have.”
“You’re starting a new relationship, so you should find someone you feel comfortable with,” says Olivarria. “If the person you’re talking with isn’t listening to you and answering your questions, don’t give them your money.”
Beware of a credit union representative who tries to rush you into signing up for an account. They should take time to explain everything to you.
Credit union representatives should want to partner with you so you’ll get the most out of your money. They also can be more forgiving and waive fees that banks won’t.
Identity theft and bank fraud are all over the news these days. You’ll want to make sure the credit union you select does everything it can to prevent unauthorized access to your personal information.
“The type of online security protection varies between financial institutions, and some of that security isn’t even visible to the consumer,” says Terri Stonebraker, vice president of Bellco Credit Union in Greenwood Village, Colo.
Besides a user’s name, PIN and password, Bellco has a biometric security layer that tracks the way the member types his or her login credentials. “If someone steals your login information, they won’t be able to type it just like you do,” Stonebraker says.
Make sure your credit union has a policy about how it contacts you. Financial institutions shouldn’t e-mail customers and ask them for their passwords, credit card numbers or other sensitive information.
“Low- or no-minimum-balance checking accounts are abundant among credit unions,” says Dusch. “Affordable pricing on checking accounts is a hallmark of the credit union movement.”
The typical credit union offers a free checking account or provides several options to help customers avoid a monthly fee, Dusch says. For example, a member can keep a specified minimum balance in a savings account, have an auto loan at that credit union or opt for direct deposit of his or her payroll check to avoid a monthly fee.
Still, federal regulations such as restrictions on courtesy overdraft fees continue to impact credit unions, and could put pressure on them to eventually end free checking.
If your car coughs when you turn the key and sneezes when you hit the gas, 2011’s predicted auto loan rates may be just the medicine you need.
While auto sales have revved slightly, interest rates are still at a “historic low and likely to remain there well into 2011,” says Bill Visnic, senior editor of Edmunds.com, an information website for car buyers. With buyers slowly cruising back into the showroom, manufacturers certainly don’t want interest rates to be the pothole that causes momentum to crash.
“The market is simply not ready from a sales standpoint for a rise in interest rates,” says Mike Sullivan, aka the “L.A. Car Guy,” scion of a Los Angeles dealership dynasty.
Auto loans, of course, aren’t easy to categorize or compare. They’re less influenced by Fed policies than, say, rates that banks charge corporate borrowers. And they’re made by a variety of lenders and often tied to promotional offers, meaning consumers can almost always benefit by comparison shopping.
For instance, dealers may be able to offer a smorgasbord of incentives, including noninterest perks like cash rebates, generous maintenance agreements and extended warranty offers. Credit unions and banks may have greater flexibility on rates, particularly if you are already a valued customer.
Promotions for loans with interest rates of zero and near-zero are around, though of course you have to have the credit score to qualify.
But what if your credit score tanked during the Great Recession? You still might find a warm welcome from your local dealer in 2011. That’s because the subprime auto loan market, in contrast to the subprime mortgage market, is showing signs of life.
The subprime market is “definitely going to expand” in 2011, says Visnic. In fact, according to Experian Automotive, the arm of the credit reporting company that reviews the car industry, the share of new vehicle loans going to “credit-challenged” buyers was up 12.7 percent in the third quarter of 2010 compared with the same period a year earlier.
“Easier access to loans is a positive sign for the auto industry, as tighter loan criteria during the economic downturn represented a significant challenge for automotive manufacturers and their retail networks,” Scott Waldron, president of Experian Automotive, said last month.
Visnic concurs. “That is a big turnaround,” he says. “It’s the first time since 2007 that the subprime market has increased.”
In a sign that could portend rate-lowering competition among subprime lenders, some of the big automotive companies are acquiring specialists in the field. Last July, General Motors purchased AmeriCredit for $3.5 billion. “Since GM and AmeriCredit launched a successful nonprime program in September 2009, GM’s nonprime penetration has increased significantly,” GM said at the time.
Chrysler, meanwhile, teamed with Santander Consumer USA, a specialist in subprime auto lending. Ralph Kisiel, a Chrysler spokesman, says about 20 percent of Chrysler sales go to subprime borrowers, which he defined as those with a credit score below 650.
“Previously, the subprime buyer had to deal with lenders who were not specialists,” says Visnic. “The specialists know how to analyze buyers, so we expect the rates will come down.”
Sullivan agrees. “If you are what we call a D risk, this may be a good time to buy a car,” he says. “It’s a win-win situation, because the high-risk buyer can get a loan, and the lending institution can make some money on the deal.” Competition for that customer is going to be “intense,” he says.
In another sign of more aggressive lending, the Experian Automotive report also noted that the average amount financed for a new car rose by $2,530 to $25,273 in the third quarter of 2010.
In 2011, says Visnic, “you won’t see any significant upward movement in interest rates until we see a robust economic recovery.”