10/31/2011 - Something is wrong when keeping cash in the kitchen cookie jar seems a reasonable substitute for your bank. It may feel rebellious -- your own little Occupy Wall Street act of defiance -- and even a bit savvy, given those checking-account fees, ATM fees, and monthly debit-account fees. That little depository institution atop your kitchen counter has big drawbacks, however, including a lack of federal deposit insurance, zero interest, and ease of access that could prove dangerous to your financial health.
There is a way to fire up both your rebellious spirit and your savings. On Nov. 5 -- the day Occupy Wall Street has already targeted for supporters to leave banks en masse -- consider one of the nation's 7,000-plus credit unions. Thanks to their structure as non-profits, they are typically fee-friendlier than banks, and becoming a member is usually much easier than you may think.
Consumer loan rates may also be more attractive. At a credit union, a five-year loan for a new car has an average interest rate of 3.6 percent, compared to 5 percent at a bank, according to Informa. Mortgages rates are a toss-up, but credit unions are the way to go if you ever find yourself needing to run a credit-card balance. A Pew Research survey reports that the median initial interest rate for bank credit cards is 12.99 percent, compared to 9.99 percent for credit union credit cards. If you end up getting hit with a penalty on your card, the median interest rate gets bumped up as high as 29.99 percent, compared to 17.99 percent at a credit union.
Read the full article, Bank Fees Are a Credit Union’s Best Friend, on Bloomberg's Web site.
Pew is no longer active in this line of work, but for more information visit the Safe Credit Cards Project on PewHealth.org.