Nov 24 2008
As the banking industry stumbles through the crisis that has gripped the financial world, consumers have a viable alternative to a traditional bank: a credit union.

Credit unions can have important competitive advantages over banks. For example, as household budgets tighten, you may find better rates on loans and savings at credit unions. And as credit dries up, you might be able to borrow money and obtain a credit card from a credit union after being rejected by a traditional bank.

Here's how a credit union can help your household:

Cheaper banking

Besides free-checking offerings, credit unions often have lower fees than traditional banks, from ATM and overdraft fees to late fees and over-the-limit fees. Most credit unions are more convenient than in the past because they are on ATM networks that can be used for deposits and withdrawals, and they offer online banking.

Recently, a one-year CD averaged 2.67 percent at banks and 3.06 percent at credit unions, according to information from DataTrac Corp. But individual banks might have higher rates than a nearby credit union.

More personal loans

Credit unions pride themselves on taking into consideration the character of a person asking for a loan, making a personal loan more likely than at a traditional bank. Credit unions also offer payday-type loans at much lower rates than other payday lenders.

Home and auto loans

Mortgage rates tend to be similar at credit unions and banks, although closing costs might be lower at credit unions. But four-year, new-car loans at banks recently averaged 6.94 percent, while at credit unions, they averaged 5.44 percent.

And while credit unions continue to be cautious about whom they lend to, a marginal borrower who was rejected at a bank might be approved at a credit union, said Jay Johnson, executive vice president of Callahan & Associates, a credit-union industry research and consulting firm in Washington, D.C.

Source : http://www.newsday.com/business/yourmoney