WASHINGTON — Credit unions were the topic of personal finance writer Sandra Block's column in USA Today last week where she reminded consumers of the good savings rates and security that credit unions can offer.
Block urged consumers to consider credit union rates on CDs, which are often higher than bank CDs. She said that several credit unions are offering 4% or higher on one-year share certificates, according to Bankrate.com.
Block also reminded consumers who are uncertain about the current economy that most credit unions are federally insured and others have private insurance.
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NAFCU President Fred Becker stated in the column that like federally insured bank deposits, credit union accounts are backed by the full faith and credit of the U.S. government and that the only difference is that credit unions are back by the NCUA, while bank deposits are covered by the FDIC.
CUNA President Dan Mica was quoted in the column saying, "If a credit union fails, the NCUA will try to find another credit union to take over customer accounts. If that's not possible, the agency will liquidate the credit union and return the money to its members. Customers typically receive their money within three days after a credit union closes."
Mica also added that many credit unions also offer lower interest rates for credit cards, mortgages and car loans and that ATM fees are often lower at credit unions than banks.
As to drawbacks at credit unions, Block said that unlike a bank where anyone can walk in and open an account one must be a member of a credit union to take advantage of its products and services. Because most credit unions are smaller than banks, Block said, credit unions don't offer as many branches or ATMs and may not provide as many products.
Block did counter these drawbacks by adding that technology is allowing credit unions to expand their reach and that many credit unions have cooperative ATM networks that offer access to more than 25,000 ATMs without paying a fee. She also said that credit unions use shared-branch agreements to increase the number of branches members can use.
Block ended the column with tips for those interested in joining a credit union.
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