By Brian O'Connell
Many credit unions have merged unscathed from the harsh economic storm, and they’re using that as a headwind to win over more banking customers. But just how competitive are credit unions, and in particular, their interest rates?

Some analysis is in and the results might surprise you.

Unlike banks, which are all about for-profit, credit unions are non-profit financial organizations owned and operated by members -- in other words, by average Americans. Since credit unions are not-for-profit, they don’t have all the added fees, high executive salaries, and onerous operational costs that banks have. Signed into law in 1934 by President Roosevelt under the Federal Credit Union Act, credit unions have used their one-for-all, all-for-one mantra to keep borrowing costs low and savings rates high. Helping credit unions in that cause is that they’re exempt from federal and state taxes, an advantage that banks have lobbied against, unsuccessfully, for years.

Of course, credit unions don’t offer the convenience, asset management capabilities, and technology prowess of big banks. Credit card users also love the points they can get for using their bank credit cards, an option that’s fairly limited for credit union members. Though, credit-union cardholders are less likely to be slammed with penalties on late payments and a credit union is less likely to hike interest rates if you’re deemed a tardy customer.

Studies also show that credit unions charge lower fees for overdraft penalties -- around $25 per transaction, as opposed to $35-to-$39 for big bank customers.

But do credit unions hold an advantage in terms of lower borrowing rates and higher savings and investment rates? According to industry figures, the data indicates that as the case.

The banking industry analyst offers a blow-by-blow comparison of average interest rates at U.S.-based credit unions versus banks, and according to December 2008 data, credit unions came out on top.  A similar comparison proved the same in September 2008.

Regardless of the data, it’s ultimately the consumer’s choice where they put their money. Whiles banks and credit unions can legitimately tout their products and services, only one can seemingly lay claim to giving consumers more bang for their banking buck.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.