How To Slash Monthly Expenses: Making The Credit Union Switch
When families find themselves struggling to pay the all the bills, the need to slash monthly expenses becomes even more important. In addition to paring back spending and paying down debts, smart consumers can stretch the monthly budget further by switching banking services to a not-for-profit credit union.
About Credit Unions
Credit unions are member-owned financial cooperatives and offer virtually the same products and services as most banks. Revenue earned goes back to the members in the form of higher rates on savings, lower rates on loans, low- or no-fee products and much better deals on some insurance offerings, such as automobile asset protection coverage.
Credit unions own about 7% of the banking market in the U.S. but their appeal is growing as more consumers gain awareness. According to Business Insider, in the last year alone, the credit union industry surpassed $1 trillion in assets, adding more than 2 million new members.
How Much Can I Save?
Start with basic checking. According to Bankrate.com, more than 70% of the largest credit unions offer free checking, compared to just 39% of banks. At an average cost of just over $12 a month for regular checking at banks, that’s $150 in immediate annual savings. For fee-based accounts, the requirements to avoid a fee are typically easier to meet at credit unions than at banks.
Overdraft fees are a big money-maker, and average over $30 at banks while the same fee at credit unions can be as low as $12 and averages in the $20s. Bank of America for example, charges $35. SunTrust charges a whopping $36 per overdraft.
Credit unions are known for making affordable car loans. A quick inquiry shows that Space Coast Credit Union of Florida, one of the state’s largest, offers rates as low as 1.89% APR on new and used cars as old as 2007 models. A $20,000 used car loan at 1.89% at 48 months costs $433 a month with Space Coast. A bank car loan at Wells Fargo in the same area will cost $458 a month at their best rate of 4.74%. That’s another $300 a year in your pocket with the credit union loan.
Paying bills online is convenient, but the wrong account can cost you. At Wells Fargo, unless you keep a minimum of $5,000 on deposit in your personal checking account, Bill Payer costs $36 a year for up to 25 payments a month. At Community Credit Union in Melbourne, Fla,, similar to most other credit unions, it’s free with unlimited payments.
Car dealers typically charge $750 or more for guaranteed asset protection insurance but your credit union may offer the same coverage for about half. That’s another $85 a year savings on a four-year loan.
So, with just a small shift to a credit union, you can easily rack up about $570 a year savings in ordinary banking and loan services and we’ve just scratched the surface. According to the Credit Union National Association Policy Analysis, credit union members in total enjoyed $5.8 billion in savings compared to bank customers in 2012.
Where to Learn More
“You may be able to join a credit union based on where you live, where you work, where you worship, or your membership in an association” recommends MyCreditUnion.gov. Formerly structured as closed memberships, many credit unions today are open to the public in specified geographic areas. To find a credit union near you click on ASmarterChoice.org or Credit Union Locator.