Alert
Close

Watch the NASCAR race on Sunday at Martinsville Speedway. Join the Drive to End Hunger!

Highlights

Open

You and Your Town Contest-You could win an AARP RealPad

AARP Auto Buying Program

Contests and
Sweeps

$10,000 Winter Escapes Sweepstakes

Beat the cold and cozy up to a chance of winning $10,000! See official rules.

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

Credit Unions: Pros and Cons

Members like the savings and service, but there are downsides

In the past two months, with 441,000 customers moving from banks to credit unions, you may be wondering, can credit unions really be that great?

Ask customers, consumer advocates and banking insiders, and you'll usually get a "yes." They like the higher interest returns for savings, lower rates on loans, and lower (if any) fees for services.

Sign up for the AARP Money Newsletter.

According to the credit union industry, its customers last year saved more than $6.4 billion — roughly $70 per member — compared with what they'd have paid to banks. A recent Harris poll finds that credit union members are up to three times as likely as big-bank customers to feel valued as a customer and to trust that institution. That suggests better customer service.

How do credit unions do it? "Credit unions are subject to many of same regulatory pressures that have prompted banks to raise fees, but what makes them unique is their not-for-profit, membership orientation," says Bankrate.com's Greg McBride. The owners are the members.

"Rather than having to generate profits for shareholders, whatever profits they generate are returned to members — through favorable interest rates, lower fees and more product offerings." Many credit unions also cut operating costs by having unpaid volunteers serving on their board of directors.

So what's the downside?

  • Fewer branches. Unlike big banks, you won't find credit unions on every corner.
  • Shorter hours for some smaller credit unions.
  • Membership restrictions. Historically, to join a credit union you had to work for a particular employer, be a member of a labor union or have some other narrow affiliation. Joining is easier today — about a third of credit unions now treat local residency as qualifying you for membership. But many still have requirements for membership.

    "Even today, not everyone can just walk in and join a credit union," says Patrick Keefe of the Credit Union National Association, the industry's trade group.
  • Fewer ATMs. That's true, but what's not widely known is that many credit unions have formed cooperative associations. That means if you join one credit union, you may use any of 28,000 ATMs belonging to others, including (at no charge) those at 7-11 stores. Look for the red-and-black CO-OP Network triangle on automated teller machines.
  • Limited financial products. Credit unions are ideal for savings and checking accounts and loans but often lack investment management, brokerage services and other more sophisticated services offered by big banks.

    If you decide a credit union is for you, visit this industry website to find one nearby.

Also of interest: Avoid credit card late fees. >>

Sid Kirchheimer writes on consumer affairs for the AARP Bulletin.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Life insurance: you are covered rain or shine

Exclusive annuities for members from AARP Lifetime Income Program from New York Life.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Homeowners Insurance
Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points