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At a time when interest rates remain at historic lows and people try to squeeze an extra fraction of a percentage point out of what they earn on checking and savings accounts, more consumers are exploring credit unions as an option.
Credit union membership is up 12 percent since 2004, to a total of 93.8 million last year, according to the National Credit Union Administration, the government’s credit union regulator.
The basic difference between banks and credit unions is in who owns them. Banks are owned by shareholders while credit unions are owned by their members and are not-for-profit organizations.
“Being part of a cooperative gives individuals more rights if they want to get involved,” said Linda Sherry, director of national priorities for the nonprofit Consumer Action. “Because of this, the rates and the products are more consumer-friendly.”
The NCUA says credit unions tend to offer fewer and sometimes reduced fees for their products and services compared to other financial institutions.
The NCUA limits the interest rate credit unions can charge on loans to 18 percent, except for short-term small loans. The same limit applies to credit cards, too.
Many credit unions offer a variety of services to members, from electronic banking to mortgage loans. And federal credit unions, as well as most state-chartered credit unions, are insured for up to $250,000 per individual depositor.
Not everyone can join every credit union; each institution’s membership focuses on certain groups of people, based on where they work, live, worship or other criteria, such as memberships in organizations.
Sherry said many people who don’t think they can become credit union members actually are eligible.
The Defense Credit Union Council counts 210 credit unions as members, said retired Army Col. Roland “Arty” Arteaga, DCUC president.
They range in size, with some operating branches on a number of military bases while others are much smaller.
To operate on a military base, credit unions must follow rules and regulations set by the Defense Department and the services, in addition to federal rules and laws. They have requirements to provide financial education on bases, for example.
While a key emphasis of all credit unions is personal service, “for those on military installations, the support for troops is paramount,” Arteaga said.
Credit unions are well suited to serving the mobile military population.
“Once a member, always a member,” Arteaga said. “With technology the way it is, you don’t physically have to walk into any particular facility. You can conduct your transactions from any part of the world.”
Some of the large credit unions compared here have a relatively small percentage of members in the military community, as they have expanded their membership groups over the years with the relaxation of federal laws.
For example, Security Service Federal Credit Union was founded by service members but has greatly expanded its field of membership. Troops and their families now make up less than 10 percent of the credit union’s membership base.
Still, SSFCU goes “to great lengths” to assist those families through financial education programs and other support, said spokesman John Worthington.
Others have expanded their military membership, including heavyweights Navy Federal Credit Union and Pentagon Federal Credit Union. Navy Federal is the largest federally insured credit union in terms of assets; Pentagon Federal, which declined to participate in our survey, is the third-largest.
Credit unions are one more option for managing your money. “People owe it to themselves to figure out if they can become a member,” Sherry said.