Save Money with Credit Union Membership

Hello, and welcome to Your Money 2.0. I’m
Thomas Fox, Community Outreach Director at Cambridge Credit Counseling. In 2010, new
regulations were introduced to rein in overdraft fees and fees assessed on debit card transactions.
Consumers and merchants embraced the new rules and the relief they seemed to provide. The
new regulations were supposed to save the public billions of dollars, and theoretically
they’ll do just that, but those “savings” are “losses” to the institutions that
formerly charged the fees. It’s estimated that limiting overdraft fees will cost the
banking industry tens of billions – that’s billion with a B – and that caps on merchant
fees will cost them billions more. One way the banks can offset these “losses”
is to phase out free checking accounts. Depending on where you bank, paying for checking could
put a sizeable dent in your annual budget. So far, we’ve heard from several major banks
that have introduced checking fees ranging anywhere from $6 to $30 a month. You can generally
avoid these fees if you maintain a minimum balance (anywhere from $1500 to $5000), deposit
a certain amount each month into your accounts, or link your mortgage or credit card to existing
accounts. The new fee structures can be difficult to
comprehend, and let’s face it, don’t you have better things to do than figuring out
a way to avoid these fees? Sure, it’s in our best interest to fully understand each
aspect of our financial lives, but outmaneuvering the banks can sometimes be a little like playing
“Pitfall” – there seem to be an endless number of obstacles in your way, and the odds
of winning often seem remote, at best. With all the demands on our time (friends, family,
career, and life itself) do we really need to develop a plan to avoid hundreds of dollars
of fees each year for a service that used to be free? Then again, as a wise American
once said, a penny saved is a penny earned. Well, as it turns out, there is another way
that you might want to consider. A fantastic alternative to using a for-profit
bank is to become a member of a not-for-profit credit union. The first credit union in the
U.S was established in New Hampshire in 1908. But it wasn’t until 1934 – at the height of
the Great Depression – that Congress, with the enthusiastic support of President Franklin
D Roosevelt, passed the Federal Credit Union Act, which enabled credit unions to be formed
in all states across the nation. FDR noted that the legislation would promote thrift
and thwart usury – that is, excessive interest charges. Today, there are more than 7000 credit
unions in the United States, with just over 90 million members. Because of the typical
not-for-profit credit union’s operating philosophy and not-for-profit status, they
are able to beat banks in nearly all categories of loan interest rates and fees. I recently spoke with Morriss Partee, founder
of the Everything CU website for credit union professionals, and he provided a wealth of
information about the benefits of using credit unions, most of which we’ll cover in Part
Two of this series. One item that struck me right away was the philosophy by which credit
unions operate- the Seven Cooperative Principles. These include policies such as open membership,
democratic control, member economic participation, autonomy, education, cooperation, and concern
for the community. These principles work in unison to ensure that the best interests of
members are upheld. Essentially, you, the member, actively participate in setting policies
for the betterment of all members – how about that for change? As if lower interest rates and fees weren’t
enough, another stunning benefit of credit unions is the sharing of revenues. That’s
right, if there are surplus funds, they are generally returned to members – you and me
– in the form of dividends. When was the last time your bank sent you a check for doing
business with them? If this information isn’t enough to make you consider a credit union,
tune into next week’s webisiode when we’ll dig deeper into how a credit union can save
you time, money, and a bit of your sanity. Well, that’s it for this edition. As always,
we welcome your feedback and ask for your thoughts and suggestions by e-mailing us at
[email protected] Thank you for watching. Until next time, I’m Thomas
Fox for Cambridge Credit Counseling.

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