I'm curious here: what are the benefits of using a credit union over a bank? What are the drawbacks?
Right now I keep 95% of my money in investment accounts (I use Interactive Brokers these days, they have reasonable fees for trades and zero bullshit, which puts them two steps ahead of any normal bank that I know of), and push the remaining stuff to a throwaway checking account @BoA as needed to cover recurring payments, bills, etc. I don't have any sort of credit whatsoever, I've always preferred to pay up-front (and yes, this has been a problem, as I've gotten older I've realized that some things, like car rentals, are exceptionally difficult to deal with without a credit card, and getting a credit card is actually somewhat difficult if you skipped it for the first part of your life, and they really don't care how much money you have if you have no credit history...).
Trust me, I'd love nothing more than to know that I was contributing absolutely zero to the consumer banks. But I've never really looked into alternatives; the main reason I use consumer banks is for convenience, like being able to set up bill payments, have a debit card, deposit checks at an ATM, etc. Can credit unions cover those use cases? And can someone like me, who's over 30 but has never borrowed money before, get into one?
The main advantage is that credit unions are member-owned and therefore run to benefit the members, not some investors. This keeps them from having an interest in screwing you via weird fees and whatnot. The main disadvantage I've seen is that smaller ones have less leverage and so you pay more ATM fees to other banks.
I've been in the no credit card boat, so I know exactly what you mean. I got mine by having a car loan I don't really need that my brother cosigned to create a credit history. You may also be able to get a loan from your broker. Mine keeps telling me how big a loan I'm approved for, though I've never tried it.
> The main disadvantage I've seen is that smaller ones have less leverage and so you pay more ATM fees to other banks.
Many credit unions are now part of ATM networks where you can use any of the members' ATMs fee-free, and in some cases can use other members' branch offices for free as well (at least for routine stuff). Depends somewhat on your location and your ATM-using habits; if you need to use a random mall ATM that doesn't help, but there are usually several member ATMs nearby.
I notice this because the only free ATMs I know of are too far out of my way to be practical. I would probably do better to move to a larger credit union, but I don't know of any others I could join.
This is another funny thing that's different in the US compared to EU, your credit ratings are done backwards.
Here, if you have never had a loan or credit card, never missed a bill payment, have a steady income, then your credit history is perfect. If you want a loan or a credit card, you'll get one instantly.
I have a home mortgage, a student loan, and a credit card I rarely use, and my credit rating is slightly worse than someone who has the same income as me, but no loans or mortgages. But in the US, it would be the exact opposite, I would be the one with a great credit rating, and the other guy would have problems getting a credit card.
So weird. :-)
I might be working in the US in the future, and I'm really dreading having to deal with US banks. I will definitely look into getting an account with a credit union instead.
The main advantage as mentioned above is that they don't tend to screw you. I'm a member of the a state credit union and have been for years. The people are more friendly, more helpful and overall provide a better experience. My cu offers all the things you listed and the only entry requirement for it is living in the state.
The downside, at least with my credit union, is that there are zero branches outside the state. When I lived in a different state for 2 years it wasn't a big deal since I could mail them checks for deposit and every store now offers cash back with even the smallest purchase (avoiding ATM fees).
BTW, BofA was the last bank I was ever at and I will tell everyone to avoid them like the plague. Simplifying numbers here, but someone gave me a $500 check that bounced. When the check bounced they took out the $500 (what they should have done), but then put a lock on the other $500 in the account. I went to branch and asked for an explanation. After a few explanations that didn't make any sense I told the manager I wanted to close my account right then and there. He said he couldn't, so I said I wasn't leaving until he did and threatened to call the police and claim theft (I was an idiot college kid at the time). Long story short, he closed the account, gave me a check and I have been a happy CU member ever since.
Yeah, my credit union had, until recently, a single branch in my hometown. Debit cards and the CU Service Centers thing has made this a complete non-hassle. The only real problem is that when I call them, I do it across time zones.
Right now I keep 95% of my money in investment accounts (I use Interactive Brokers these days, they have reasonable fees for trades and zero bullshit, which puts them two steps ahead of any normal bank that I know of), and push the remaining stuff to a throwaway checking account @BoA as needed to cover recurring payments, bills, etc. I don't have any sort of credit whatsoever, I've always preferred to pay up-front (and yes, this has been a problem, as I've gotten older I've realized that some things, like car rentals, are exceptionally difficult to deal with without a credit card, and getting a credit card is actually somewhat difficult if you skipped it for the first part of your life, and they really don't care how much money you have if you have no credit history...).
Trust me, I'd love nothing more than to know that I was contributing absolutely zero to the consumer banks. But I've never really looked into alternatives; the main reason I use consumer banks is for convenience, like being able to set up bill payments, have a debit card, deposit checks at an ATM, etc. Can credit unions cover those use cases? And can someone like me, who's over 30 but has never borrowed money before, get into one?