Anyone who makes a habit of searching for generous certificates of deposit, savings or money market accounts quickly notices that one of the best sources is one of the most commonly overlooked: credit unions.
The BankingMyWay.com search tool for example, generates a list topped by a six-month CD yielding 2.5 percent, compared to a national average of just over 1 percent. You can buy this CD with as little as $500, while most top-paying CDs require $1,000, or $2,000, sometimes more.
So who offers such a great deal? The Police & Fire Federal Credit Union of Philadelphia, that’s who.
You may be shrugging your shoulders right now, unless you’re a firefighter or police officer in Philly. But many people have more access to credit unions than they think.
While many credit unions are connected to specific employers or unions, others are open to people in given geographical areas, people who share a religion or who belong to certain professional associations. To find a credit union for which you may be eligible, use the search tool provided by findacreditunion.com.
Join a credit union through your workplace or other association and you can be a member for life, even if you change jobs and move on, so long as you keep your account active.
Because credit unions are non-profit organizations owned by their members, they try to keep costs low and offer the best deals they can. Data collected by the National Credit Union Association, a government agency, shows credit unions typically offer mortgages, car loans and home equity loans at lower rates than banks.
These days, many credit unions offer a full array of products and services: credit and debit cards, mortgages, car and personal loans, savings and checking accounts, ATMs, even online bill paying. Deposits are federally insured, just as they are at banks.
There can be disadvantages as well. The number of branches and business hours may be limited, though many credit unions belong to an ATM-sharing co-operative that offers a machine locating service.
Credit unions typically don’t return cancelled checks, though many banks have dropped this service as well. Also, many credit unions don’t offer as many online services like account management and bill paying. A credit union may take longer than a bank to approve a mortgage or other loan, though its fees may be lower.
For many people, it makes sense to use a large bank like Bank of America (Stock Quote: BAC) or Wachovia (Stock Quote: WFC) for checking and online bill paying, to get the widest possible access to ATMs. The big banks work well with financial software like Intuit’s (Stock Quote: INTU) Quicken, or Microsoft Money (Stock Quote: MSFT).
A credit union can then be used for CD’s, savings and money market accounts, as well as the occasional loan.
Over the years that could really pay off. Why settle for 1 to 1.5 percent on a bank CD if you can get 2.5 percent from your credit union. Use the Certificate of Deposit Calculator to compare earnings at various yields. And check out the array of calculators related to mortgages, car loans and other financial needs.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.