: : : : : Personal Finance : : : : :
who wants to join a credit union can
find one, says Curtis Arnold, founder
of CardRatings.com, a credit card–
information website. You can sometimes
even buy your way in: pay $20 once to
join the National Military Family Association and you can become a member
of Pentagon Federal Credit Union.
Before You Join
a Credit Union
An Edge on Rates
A Can-Do Attitude It’s a telling indictment of banks that what members seem to like most about credit unions is their service. When my sister arrived in a new town to start a job, for example, she was able to borrow to buy a bed the moment she
joined a credit union. And a friend says
his credit union found a way to wire
emergency money to his daughter’s
overseas bank account—after two
banks told him it couldn’t be done.
Disillusioned bank customers say
the contrast is striking: “Our community bank went through three ownership changes in the past few years,
each time with cuts in service,” says
freelance journalist Dave Lindorff of
Maple Glen, Pennsylvania. “I walked in
to get an advance on our home-equity
line of credit one day and the teller said
it had been frozen.” After Lindorff
pointed out he had substantial equity in
There are always three compelling
reasons to switch banks: lower fees,
higher interest, and better service.
that loan accounts you open at a credit
union are usually tied together. With a
car loan, the car becomes collateral for
the balance on your credit card issued
by the credit union. That’s a problem if
you default on the card.
Limits on Lending
Unlike many banks, credit unions
emerged relatively unscathed from the
subprime-mortgage meltdown and do
not have huge losses to write off. They
are eager to increase their lending to
small-business owners, except that
federal law limits their ability to do so:
any loan above $50,000 is considered a
business loan—and total business loans
can’t exceed 12. 25 percent of their as-
sets. Credit unions are urging Congress
to pass pending legislation that would
raise those caps, allowing the lending
of 25 percent of assets to business own-
ers and redefining a business loan as
any amount above $250,000.
Contributing editor Lynn Brenner wrote
about the new dangers in bond investing
in the May–June issue.
1 Cast a wide net. To find credit unions you’re eligible to join, go to
creditunion.coop or findacreditunion
.com, or call the Credit Union National
Association at 800-358-5710. In addition, ask relatives, since many credit
unions are open to extended family.
2 Make sure your deposits will be insured. Ninety-eight
percent of the nation’s credit unions are
covered by the National Credit Union
Share Insurance Fund, which is backed
by the full faith and credit of the U.S.
government and provides the same limits of coverage as the Federal Deposit
Insurance Corporation.
3 Ask about services you’re seeking. Most credit unions
provide a full range of banking products
and services, but smaller ones may have
limited offerings. Some small credit
unions don’t offer mortgages or business loans, for example, nor will they let
you pay bills online.
4 Check for CO-OP Network membership. This network
provides surcharge-free access to automated teller machines at more than
28,000 locations in the United States
and Canada, including 9,000 deposit-taking ATMs and 5,500 7-Eleven stores.
Plus, the CO-OP Network’s members
have access to 800,000 cash machines
worldwide through links to NYCE, STAR,
Cirrus, Pulse, and Plus. —L. B.
ILLUSTRATION BY ROSS MACDONALD
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