With all the news of large banks raising fees and ending their free checking, keep an eye out for credit union deals. Many credit unions are realizing that this is a good time to attract new members as people ditch their fee-charging banks. More people are starting to realize the benefits of credit unions. However, not all credit unions are perfect. If you're shopping for a new checking account, here are some important credit union features to consider.
The most important feature to consider for a credit union is eligibility. There are still many credit unions that have restrictive membership. Usually, these types of credit unions are only available to employees of certain companies. However, many credit unions are now open to anyone who lives, works or worships in their local area. Also, you can be eligible to join several credit unions by just joining an association. Once you are a member of a credit union, you don't have to worry about losing your eligibility. So if your membership in the association ends or you change jobs, you can remain a member of that credit union.
Truly Free Checking
If you are eligible to join a credit union, the next question to ask is if that credit union offers a free checking account. As I described in July, credit unions don't always offer free checking accounts. I've seen several credit unions end their free checking. Just like some of the big banks, you might have to maintain a minimum balance or establish direct deposit to keep the checking account free. It's a Federal Reserve regulation that if a bank or credit union advertises a free checking account, there should be no requirements to keep it free.
If you use ATMs, an important feature to consider is the credit union's ATM network. Many credit unions have partnerships with ATM networks such as the CO-OP Network and Credit Union Service Centers Network. These give you surcharge-free access to thousands of ATMs throughout the U.S. and Canada.
Shared Branch Network
If you want to be able to visit a branch to make cash deposits or for other transactions that need a branch, choose a credit union that is part of the shared branch network. Just like with ATM networks, many credit unions have joined shared branch networks. CU Service Centers have thousands of credit union branches in their network throughout the US. At a shared branch you can perform many banking transactions just as if you were at your home credit union such as making deposits, withdrawals and loan payments.
Except for reward checking accounts, it's rare to find a high-interest checking account at a brick-and-mortar institution. Most interest checking accounts offered by your local credit unions or banks have rates that are so low that they are not worth it. The little bit of interest doesn't compensate for the minimum balance requirements or other requirements to keep the account free. One of the very few exceptions is the High Rate Checking at Alliant Credit Union.
Another option if you want to earn a top interest rate is to have a two-bank strategy. Maintain a free checking account at a local credit union and open an internet savings or checking account to earn a competitive rate. Internet banks like Ally Bank and ING Direct make it easy to transfer money electronically from your local checking account to your online account. I have more details about this strategy in my post on Choosing a New Bank.
Free Rewards Checking Accounts
If a high interest rate is important for your checking account, reward checking is an option. Even though rates have fallen, most still offer rates higher than internet savings account rates. To qualify for the high rates, you do have to meet the monthly requirements. Also, the balance that qualifies for the high rate is typically $25K or less. Please refer to my post, 10 Common Traits of High-Yield Reward Checking Accounts, for more reward checking account details.
It's important to note that the vast majority of reward checking accounts are also free checking accounts with no monthly maintenance fees. You only have to meet the monthly requirements to qualify for the high interest rate and the ATM fee reimbursements. If your reward checking account is at a credit union and that credit union is part of an ATM network, you can depend on the ATM network for free ATM access.
Finding Credit Unions Using Our Rate Tables
Here's our rate table for reward checking accounts. As I mentioned above, the vast majority of these are free checking accounts. We also have a table for regular interest checking accounts. Unlike reward checking, interest checking does not have debit card usage requirements. However, many interest checking accounts may have minimum balance requirements or other requirements to avoid monthly service charges. Finally, you can use our Free Checking Finder tool to see total savings after considering fees and rates on both reward and interest checking accounts.
In our rate tables, we list banks and credit unions. To list just credit unions, select the "Filters Accounts" button on top of the table and select only "credit unions" under "Type of Institution". When you press the "Find" button, the table will update to show only credit union checking accounts.
The "Filters Accounts" box can also be used to show institutions in your state. Please note that you may not be able to qualify for many of the credit unions listed even if they're in your state. Some credit unions limit their membership to residents of specific counties. Also, some credit unions limit their membership to employer groups. To see if you're eligible for the credit union, clock on the plus sign on the left of the credit union name. This will open up the row with additional information including the credit union requirements. For more details, click on the credit union name. This will take you to our hub page for that credit union. Near the top of this page we provide basic information on the credit union including the website address. Click on this to visit the credit union. Most all credit unions provide deails of their membership on their website. Also, under the overview tab, the titles of recent blog and forum posts are listed. Click on a title to visit the blog post for more information on membership.
For more instructions on finding local credit unions (that includes pictures), please refer to my post Getting The Most Out of Our Rate Tables.