NEW YORK (11/5/12)--Today's anniversary of Bank Transfer Day has prompted comparisons of credit unions with big banks. A NerdWallet analyst writes in the U.S. News & World Report that compared with Chase, Wells Fargo, Citibank and Bank of America, credit unions turn out to be the better banking option.
In a blog entitled, "Are Credit Unions a Better Option?" NerdWallet analyst John Gower notes that while "by no means a new concept (the oldest dates back to 1908), credit unions further penetrated the national consciousness in late 2011" when Bank of America proposed its $5 monthly fee on debit card accounts and the grassroots event Bank Transfer Day urged consumers to leave big banks for smaller, community-focused credit unions."
"Over the last year, NerdWallet.com has conducted extensive analysis in various facets of banking--pitting credit unions vs. banks. The results show that, when it comes to many basic services, credit unions outperform the biggest banks."
The blog had these things to say about credit unions:
Since the Dodd-Frank Wall Street Reform Act, most big banks have eliminated free checking accounts, requiring consumers to meet a minimum balance and other requirements. Most credit unions, however, continue to "maintain a truly free checking account." Among the top 10 banks and credit unions in the U.S., 70% of credit unions offered free checking, while just one of the banks did--an average savings of more than $100 per year for consumers. Many credit unions also pay dividends on checking balances--"something that's usually only found with high-fee premium checking at the big banks."
Credit unions offer higher deposit rates than banks, Gower writes. Big banks offer no interest on a basic savings account and under 0.75% annual percentage yield for a five-year certificate of deposit; credit unions average more than 0.15% for savings accounts and 1.42% for the CD--nearly double what's offered the big banks.
Credit unions' shared branches address any concerns about limited access to branches and ATMs. Members have access to nearly 5,000 branches of the CU Service Center network nationwide, just under Wells Fargo's 6,300 branches and Chase and BofA's 5,700 branches.
"Credit unions actually outperform the big banks when it comes to self-service access to your money" because of their surcharge-free ATM network. The largestincludes more than 30,000 ATMs, Gower writes. At Chase or any other bank, customers are limited to fewer than 20,000.
"As the anniversary of Bank Transfer Day approaches, don't ignore your local credit union as a viable option for your banking business. Lower fees and higher deposit yields are likely worth a switch," Gower concluded.
Use the link to access the full article.