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From bank to credit union

Posted Oct 22 2007, 12:29 PM by Karen Datko
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This post comes from J.D. Roth at partner blog Get Rich Slowly.

Banks have made a fortune off me. I had an account with a major U.S. bank for 18 years. I paid an $8 service charge every month. I paid to have my checks returned. I paid to use ATMs. Through my own stupidity, I paid lots of overdraft fees. As my money skills improved, the overdraft fees vanished, but the other fees -- and lousy service -- remained.

I finally got fed up. Last year, I switched my account to a local credit union. I had wanted to leave my bank for years, but hesitated because I thought it would be difficult. I was nervous about missing a payment on my home-equity loan, which was pulled automatically from my checking account. I was afraid I'd forget an outstanding check.

I needn't have worried. The transition was easy. People do this every day.

Here's how I finally made the switch:

  • I withdrew several hundred dollars from my bank and used the money to open an account at the credit union.

  • One by one I transferred automatic transactions to the new account. I began writing checks on the new account. I stopped using my old account completely.

  • When I was sure everything was working as intended, I went in and spoke to a banker. I took all my money in cash and immediately deposited it into my credit union account.

In retrospect, I'm not sure why I waited so long to leave my bank. The credit union has no fees, other than a $1 fee if I overdraw my checking account and money in my savings account is used to cover the draft. The credit union's ATMs aren't as plentiful as the bank's ATMs, but this is very easy to plan around.

Even the credit union's online banking services are superior. That's right: A four-branch credit union has better online capabilities than one of the largest banks in the nation.

This simple change has saved me at least $96 a year in bank fees, and has actually made dealing with a financial institution a pleasant experience.

Other articles of interest at Get Rich Slowly:

“Ask the readers: best brick-and-mortar banks?”

“The Co-Op Network: Another reason to consider credit unions”

“Which online high-yield savings account is best?”

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Comments

 

Are you serious?  Eighteen years paying $8 per month just to be their customer?  Did it never occur to you to shop around?

I have been a customer of Bank of America for over eight years and never paid a penny to be their customer.  When a better offer came along (in the form of higher savings account rates) at Washington Mutual, I transferred my money, and still never paid a penny!  And then the same with ING Direct.

In fact, the only account I am considering closing today is a credit union account, because the rates they pay on savings accounts are abysmally low and the fees they charge, if you don't follow their exact rules, are incredibly high.

I'm sorry, but if I had any advice to someone looking to escape bank fees, it would NOT be to go to a credit union.  It would be to shop around for another bank that doesn't charge you $8-a-month sucker fees.  

Jason (Posted 10.24.07 12:13 AM ) Report Abuse

I am a credit union junkie. When I joined the faculty at Michigan State back in 1974 I started an account with a traditional bank. I then discovered Michigan State University Credit Union and I have been so pleased with their service I never looked back. I moved to Colorado in 1996 and kept my account active at the credit union and opened up an account in a traditional bank in Colorado and found that this bank still had all of the flaws of the banks I had dealth with 30 years ago. So, I only bank at my credit union. Their internet service is great, thus no need for my local traditional bank. I strongly encourage your readership to look seriously into their local credit union. Mine has been fantastic.

Dr. James L Bennett (Posted 10.24.07 4:12 AM ) Report Abuse

I've been a Canadian Credit Union member for 55 years now (my grandfather opened the account when I was born) and I've never wished I'd been bullied by the banks. I've had to deal with the big boys a few times and I'm always reminded why I like going back to the CU especially when I compare service charges, personal service, great rates and insured deposits too. Who better to understand you than your neighbours and other local people who make up the boards?

Steve C (Posted 10.24.07 4:40 AM ) Report Abuse

I LIKE MY CREDIT UNION BUT IT DOES HAVE DRAWBACKS. THEY DON'T CASH SAVINGS BONDS I CAN'T TRANSFER MY FED DIRECT DEPOSITS TO THEM.

niall.one (Posted 10.24.07 8:36 AM ) Report Abuse

To bad you did not give a small community bank a chance. They give great service and do not gouge you with service fees. They may not pay as high an interest rate on your savings but that is because they pay income taxes. Credit Unions pay no tax. I am also curious how you qualified to do business with a credit union. I thought they were resticted to do business with their employees and employees families only.

a community banker (Posted 10.24.07 10:24 AM ) Report Abuse

I changed to a credit union in '77 after I got fed up not being able to EVER balance my checking account at a local bank.  I have not looked back.  Even though the credit union is 3/4 of the way across the country, I get splendid service all the time.  My paycheck, my wife's paycheck and my Army retired paycheck all are direct deposited and I use the savings account as an overdraft buffer too, with the same low fee if it's used.  We even have a local credit union for emergency funds.

Russ Herberg (Posted 10.24.07 10:34 AM ) Report Abuse

I have found the 25000+ ATM's (no charge) available for most credit union members easily outnumbers the ATM's available with any large US bank.

Kurt (Posted 10.24.07 10:35 AM ) Report Abuse

would i be able to get a western union bank account even if i have to pay a over draft of 300 some some dollars that i ohnesty did not do

wendy sullivan (Posted 10.24.07 10:42 AM ) Report Abuse

Why blast all banks because of your experience with one?

That was a disservice to all banks and the people that work for them.

The problem at least in part was banking with a big bank with too much management and not enough flexibility.

When the credit union disappoints you and they will, try a smaller community bank.

doug (Posted 10.24.07 12:16 PM ) Report Abuse

since I open my savings and checking account with a credit union I'm able to save more and keep track of all my bills I love my Premier credit union they're service is the best .....

vicky thompson (Posted 10.24.07 1:17 PM ) Report Abuse

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