Transcripts

"Money File"-Cashing in on Credit Unions

SUSIE GHARIB: In the "Money File" tonight, the benefits of joining a credit union. Here's Eric Schurenberg, managing editor at "Money" magazine.

ERIC SCHURENBERG, MANAGING EDITOR, MONEY MAGAZINE: If you belonged to a credit union in the past, it was probably because a volunteer at work or church let you know about the deal you could get on a car loan. Well, these non-profit financial cooperatives still offer car loans, but today, they're locked in competition with commercial banks for all your banking business and that's good for you. Here are three reasons a credit union is worth a look.

First, it's likely to offer a better savings yield. The average for six month CDs, for example, is 3.45 percent at banks nationwide. But "Money" found comparable credit union CDs at over 5.4 percent. Second, credit card deals could well be better. The average bank card today charges an interest rate of 13.7 percent. At credit unions, it's 12.2. Penalties for late payments tend to be lower, as well. Now there's one drawback. Rewards programs are typically better at banks. Third, the old standard -- credit union auto loans tend be one or two percentage points cheaper than at similar-sized banks.

Now, to join a credit union, you have to be affiliated with a group that has one, but that affiliation can be pretty loose. If someone in your family belongs to a credit union, you may qualify to join, too. Your trade group, alma mater or church may give you an in. You can also go online and do a search for find a credit union. One caveat -- most credit unions still can't match big banks in the breadth of financial products or services. So you may want to combine your membership with a checking account at a regular bank, could be the best of both worlds. I'm Eric Schurenberg.