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Your Financial Future:

Bye-Bye, Megabank?

There are about 8,000 credit unions with about 90 million members. While many credit unions are tied to workplaces, you may be eligible for membership through your church, neighborhood group or some other association. For instance, the Polish and Slavic Credit Union in Brooklyn serves individuals of Polish or Slavic heritage, and the Queen of Peace Arlington Credit Union in Virginia serves members of the parish. One of the largest credit unions, USAA, serves active and retired military personnel.

Smaller banks and better service

Of the 8,246 banks in the United States, nearly 8,000 are community banks. You can find a community bank near you by going to the Independent Community Bankers of America website.

Community banks offer personal customer service, says Karen Tyson, senior vice president of communications. They’re also “owned by someone and managed by someone who lives in the community and cares about their customer, and who is likely to take a more conservative approach to banking than the big banks,” she says.

“We offer really competitive rates and in most cases our fees are better than other institutions’,” Tyson says. “And when you do business with a community bank, your deposits stay local and the loans are also local. Your money is helping your neighbors.”

Brobeck agrees that fees at community banks are a little lower than at some of the big banks. “But you can’t be assured just because it’s a community bank,” he said. “You have to talk to them about their practices.” For instance, find out what charges you may incur from an overdraft.

Goodbye to checks

Brobeck says that one cost-saving alternative for people who don’t have a lot of money is to forgo a checking account and instead maintain a savings account at a bank or credit union. Typically you can use an ATM or a branch office to withdraw funds from a savings account three times a month without charge, if you maintain a minimum balance, he says.

Instead of writing checks, you buy money orders, which he says “tend to be loss leaders even at check-cashing places. Even if it’s $3, it’s typically less than bouncing a check or two,” because fees for a bounced check run around $35, he says.

“More important than the institution you select is the way you bank,” says Brobeck.

“You simply can’t afford to overdraw your accounts,” he says. If you can’t make a payment to a utility or a credit card company, call the creditor and work out a payment plan.

If you do have your pay deposited directly into a checking account, save automatically by telling your bank or credit union to transfer some of each check into a savings account. Every little bit helps, Brobeck says. Saving “$500 is better than nothing.”

Martha M. Hamilton, formerly with the Washington Post, writes a regular column, Your Financial Future, for AARP Bulletin Today.

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