credit & debt

The Credit Union Advantage

A study shows that some fees are lower and yields are still higher at these institutions.

Like their bank counterparts, credit unions have raised fees -- and are expected to continue to do so this year, according to the Bankrate.com 2011 Credit Union Checking Study. Yet the survey of the nation's 50 largest credit unions found that these small, not-for-profit institutions still have fee -- and other -- advantages over banks. Here are highlights of the study:

More free checking. Of the credit unions surveyed, 76% offer free checking accounts with no strings attached, and another 20% waive fees for members who sign up for direct deposit or to receive electronic statements. On the other hand, 65% of banks offer free checking with no strings attached. However, the availability of free checking at credit unions may decrease as a result of financial reform.

Lower ATM fees. Credit union members are charged $1 to $1.50, on average, for out-of-network ATM withdrawals, whereas bank customers usually pay $2 (in addition to the fee charged by the out-of-network ATM). Of the credit unions surveyed, 26% offer members a certain number of free out-of-network ATM transactions or don't charge at all.

Higher yields. Interest rates on credit union checking accounts have fallen from an average of 0.3% in 2010 to 0.17% this year -- but that's still higher than the 0.1% you'll get, on average, at a bank.

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