Why use a Credit Union for All Your Banking Needs?

Nobody likes to pay bank fees, but if you're not trying to reduce high bank fees, you are probably paying more than you should compared to banking at a Federal (FCU) or State Credit Union.

A state chartered or federal credit union often will usually offer lower savings and checking account fees and misc banking costs vs banks, and also more favorable loan interest rates, combined with often friendlier and more personal service!

In fact, by using free banking service of a credit union mortgage loan officer you likely will not need to use a mortgage broker when completeing a mortgage loan application to buy your new home.

One of the most important actions to take in order to reduce the banking fees is to figure out exactly how you use your bank.

Consider what your average credit union, savings & loan or bank account balance will be and how low the balance may go. Also consider the type of transactions you make and what types of financial services you need. Once you have a better understanding of how you utilize the bank, you are in the position to get the most out of it while avoiding fees for services you don't need or use.

Probably the best move you can make is to try and qualify as a member of a credit union. Credit unions are not for profit organizations meaning they don't have to worry about making a profit.

The qualifying factors to join a credit union vary from institution to institution, so you will need to check with each CU. The good news is that there are a large number of credit unions associated with a wide variety of organizations. Qualifying for inclusion has been broadened a great deal over the years, so it is much easier to find a way to qualify.

Interest rate shoppers are finding some of the best financing deals for home mortgage loan refinancing are in fact offered by state and federal credit unions.

Since federal credit unions are there for their members and are not out to make a profit, they are more likely to offer completely free checking or free checking with a small minimum balance. In most cases, they also charge lower banking fees and their interest rates on accounts are better.

A big drawback is they tend to have fewer bank branches and less common automatic teller machines (ATMs) than major bank networks which can be costly if you are an ATM addict. You can begin your search to locate a credit union near you at the National Credit Union Administration NCUA.

If a credit union isn't a possibility, then you need to take a look at the different types of banks or S&L's. While major banks will have better distribution of ATMs and a greater variety of services, their fees can be as much as 50% higher than those of local banks and credit unions. It is also worthwhile investigating Internet banks since their fees still tend to be lower than those of major banks.

Once an appropriate bank has been chosen, reducing the standard fees they charge is an important. Although there are a wide variety of checking accounts offered, most banks will offer at least two typical checking account alternatives. A basic checking account will have a lower minimum balance requirement, but it will usually have restrictions on the number of no cost transactions you are able to make each month.

A premium account will usually offer interest and allow for more no cost transactions, but will require a larger minimum balance to avoid monthly fees. Not meeting the requirements of either of these can be quite costly, so it pays to chose the checking account style that best fits your use.

Although an interest earning checking account seems like the right choice to make, there are a variety of situations where you're better off choosing a no interest checking account. If your account balance fluctuates constantly, you are likely to go under the minimum balance required for the account even a few times during the year, you are likely to pay more in fees than you will ever earn in interest.

In addition, regular checking account interest rates are the lowest, so choosing a checking account with no interest and a low minimum balance can make sense if you can put the difference into a higher yielding account, including higher-yield demand deposit money-market checking accounts.

Many people have several bank accounts at different institutions. It sometimes make sense to consolidate them at one Central FCU (Federal Credit Union). Consolidating your banking to a central CU or Bank can also give you more leverage in negotiating fee reductions and allow you to be more proactive in getting the best banking deals available. If you keep several different accounts at a CU/Bank, some bankers will take into consideration the total balance of all your accounts at the banking institution.

Although you may not have the minimum requirement in your checking account to earn interest, if you are also keeping a large deposit in a CD account that more than covers the checking minimum, the bank may be willing to count the balance of the combination of accounts as meeting the minimum requirement.

Another option that can give you leverage when negotiating on checking account fees is to have your paycheck direct deposited. Although every bank has its own set of rules, most will waive the checking account monthly fees if you direct deposit your paycheck.

Don't, however, assume they will automatically give it to you. Chances are you will have to politely ask before they offer you this service.

A further possibility in getting free checking is to make a financial investment in the financial institution. Although this doesn't work with the larger banks, some small to medium sized banks have programs that award free checking and other special offers to investors. All you need to do is purchase a single share of stock to qualify.

The above creditunion article was edited, expanded and enhanced by the OFCU website editor. Main article was written by and copyright© by Mr. J. Strain, who has published hundreds of money saving articles and the creator of the Daily Money Saving Challenge Program. He is the co-owner of saving-advice. A web-site dedicated to saving you money.