You will be redirected to the page you want to view in  seconds.

Consumer Watch: Credit unions generally charge less in fees than banks

Oct. 30, 2011 - 11:36AM   |   Last Updated: Oct. 30, 2011 - 11:36AM  |  
  • Filed Under

With the news these days about some banks charging extra fees, many people are thinking about moving their accounts.

It's not easy to compare financial institutions, and you usually have to dig for the data you need about checking fees.

But overall, it appears military customers are paying less in fees at credit unions than at banks.

A Military Times analysis of the 218 credit unions and 32 banks with operating agreements on installations shows the average amount in fees collected by these credit unions in 2010 was $45 per deposit account, compared with an average of $82 for on-base banks.

Features vary from one financial institution to another, and in fairness, many banks have favorable terms and services. But some reasons to consider credit unions include:

The nature of credit unions' operations allows them to keep fees low. They are financial cooperatives and not in business to make a profit. They're exempt from federal and state income taxes, although they do pay payroll, sales and property taxes. Like on-base banks, credit unions are required to provide financial education on bases where they operate.

You might find higher interest rates on savings.

You might find lower interest rates on loans; an interest-rate cap of 18 percent applies to loans made by federal credit unions through at least Sept. 10, 2012. The cap applies to all federal credit union lending except for short-term, small-dollar loan programs. (Credit unions can make small loans, as alternatives to payday loans, at annual percentage rates up to 28 percent.)

Many credit unions offer loans at less than 18 percent interest, depending on your credit rating.

Some offer interest-earning checking accounts, though rates are low. This doesn't necessarily mean you won't have to pay monthly maintenance fees, so read the fine print. Many banks and credit unions on military bases offer free checking as long as you use direct deposit.

Joining a credit union may take a little more work. Each one's charter specifies who is eligible to join, based on a common bond of employment, association or residence; eligibility details are available on their websites.

Eligible people submit a membership application and purchase a share to join usually $5 to $10.

Deposits in federal credit unions are insured up to $250,000 by the National Credit Union Share Insurance Fund, backed by the government.

As you explore the best financial institution for you, read the fine print carefully on any product look for policies on ATM charges, debit and credit card charges and monthly maintenance fees on checking accounts. Is there a fee for transferring your money from one account to another, such as from savings to checking? Check for overdraft fees and policies on charging multiple times in a day.

In this ever-changing fee environment, it's imperative that you open and read any mail from your financial institution. That includes checking your monthly statements for any changes and new charges.

Keep careful tabs on your statements to see what fees you are paying, and decide whether you need to make a change.

Remember: You have options to make responsible choices in your banking habits.

Answers by RallyPoint

Join trending discussions in the military's #1 professional community. See what members like yourself have to say from across the DoD.

More In Pay & Benefits

Start your day with a roundup of top defense news.

VA Home Loan

Search By:

Product Options:
Zip Code:

News for your in-box

Sign up now for free Military Times E-Reports. Choose from Money and Education. Subscribers: log in for premium e-newsletters.

This Week's Army Times

This Week's Army Times

CrossFit vs. unit PT
Troops will do the training plans in a $2.5 million study

Subscribe for Print or Digital delivery today!

MilitaryTimes Green Trusted Classifieds Looking to buy, sell and connect on Military Times?
Browse expanded listings across hundreds of military installations.
Faces of valorHonoring those who fought and died in Operations Iraqi Freedom and Enduring Freedom.
hall of valorThe Hall of Valor is a searchable database of valor award citations collected by Doug Sterner, a Vietnam veteran and Military Times contributing editor, and by Military Times staff.

All you need to know about your military benefits.

Benefits handbook

Guard & Reserve All you need to know about the Guard & Reserve.

guard and reserve handbook