Tuesday, March 22, 2011

Money Tip #2: Become a member of a Federal Credit Union

source: www.ncua.gov

Once again, I have a great tip on saving money or building wealth. I am all about Working to build financial freedom. I know too many people who are in debt and cannot ever seem to save a few dollars for several reasons. This tip will help you, yes YOU build some wealth. There are several reasons why Federal Credit Unions are a better alternative than your average bank. Before you think that federal credit unions are one step below your average bank, they are not. Federal Credit Unions are insured by the National Credit Union Association (NCUA), which is backed by the U.S. government. The NCUA seal is identical to FDIC, which insures banks in the United States. In fact the NCUA and FDIC are identical in that they both protect your money, provided you stay within the coverage limits of $250,000 (www.ncua.gov). 

Here is why you should consider a Federal Credit Union over a bank:
  1. Credit Unions (CU) offer higher interest rates on your savings account. This was one of the biggest reasons I opened an account at a CU.  I was earning 0.01% on my savings account at my bank, which was practically nothing, I mean zero. I switched over to a Federal Credit Union and I am now earning between 0.125 – 0.25% APY. This makes a big difference from the lousy 0.01% that I was getting. The reason that Credit Unions offer higher interest rates and smaller fees (another reason you should consider a CU) is that they are not-for-profit. Most banks are not.
  2. By opening an account at a credit union, you become a member and you are considered a part owner of the credit Union. A great perk is that since Credit Unions are not-for-profit, any profit that they do earn goes to you (the members) in the form of dividends. Nice right!
  3. Credit Unions offer lower rates. They offer lower interest rates on credit cards, loans. In fact, credit unions are more likely to offer loans to small business owners in the community than your larger commercial banks.
  4. Credit Unions have great relationships with their members in the sense that they provide additional financial services to their members. For instance, the credit union that I joined, does free-tax preparation for its members and provides classes on foreclosure prevention, financial guidance and home-buyer education and counseling. Typically, such services are not provided at large, commercial banks. 
By the way, anyone can join a credit union, all you need to do is live, worship, work or go to school in the area. When searching for the right credit union for you, this site can help.
For more information on Federal Credit Unions, refer here.  
I hope this helps, 
Lilia :o)