Consider a Credit Union
They offer some compelling advantages

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By Selena Maranjian (TMF Selena)
May 2, 2002

Q. Do you recommend credit unions?

A. Credit unions have advantages and disadvantages. Let's review them:


  • They're owned by their members, and are non-profit.
  • They offer competitive interest rates, usually beating the best rates from local banks.
  • Their service is often better. If you turn to a traditional bank for guidance, you might not be told everything you should know, as that's not always in the bank's best interest. But credit unions have no reason not to help you as much as they can.
  • Credit unions offer more and more services these days. Many offer credit cards, debit cards, mortgages, car loans, checking, and more.
  • At many credit unions, you need just $1 to open an account, qualifying you to take advantage of their many services.


  • Credit unions typically have few branch offices and few, if any, ATMs. To circumvent the ATM problem, many credit unions have formed networks of surcharge-free ATMs that members can use.
  • Not all are insured. The National Credit Union Administration insures roughly 97% of credit union member deposits up to $100,000, but a few credit unions remain uninsured. Before signing up with a credit union, ensure that it's insured.
  • Some credit unions don't return cancelled checks to you. But many traditional banks have stopped doing this, too.
  • Your local credit union may not offer you as many services as you can get from the neighborhood bank. Check to see what's offered. You may end up deciding to keep accounts at each, for different purposes. (On average, though, credit unions have been adding services over the years.)

Learn more about credit unions at the website of the Credit Union National Association. That's also where you can search for credit unions in your neighborhood. Not everyone is eligible to join one, but tens of millions of Americans are -- so don't assume you're out of luck. You may be able to join through your employer, community, religious group, or some other association. If your employer isn't affiliated with a credit union, consider asking your benefits office to look into developing an affiliation.

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This question and answer is adapted from The Motley Fool Money Guide: Answers to Your Questions About Saving, Spending and Investing. For answers to this and 499 other common money questions, check it out -- it's a handy resource.