Credit Union, Home Equity Line Of Credit, Loans
March 10, 2016
If you are serious about making the most of your money, you should be doing your financial shopping at credit unions.
A recent survey by depositaccounts.com confirmed once again that credit unions-especially large ones-consistently offer the best interest rates on savings accounts and certificates of deposit.
And that’s just the start. If you are shopping for a car loan, you are nuts not to check out credit unions. According to a national survey, the average interest rate for a 3-year loan for a used car in late 2015 was 2.7% at credit unions, compared to a bank average rate of more than 5%. (Yes, those great financing offers in ads from car dealers look even better. Yet they are typically offered to only a very small percentage of buyers who have fantastic credit scores.) On a new car loan the credit union average rate was about 2 percentage points less than the bank loan rate.
If you’re thinking about a home equity line of credit (HELOC) or loan, again credit unions offer the better terms. The one area that was a tossup: home loans to purchase a home.
Credit Union Tips
• Become a member. Credit unions only offer accounts to members, often for a one-time fee of less than $20 or so. Sometimes membership is restricted to a certain group, such as employees of a company, or a local organization. But quite often credit unions will offer membership to local residents. And there are a few credit unions that accept members nationwide, often just for a one-time donation or fee. You can use this credit union finder to look for local credit unions. And be sure to do a quick web search for “credit unions nationwide” or “credit unions anyone can join” to find credit unions that accept members from far and wide.
• Check in with your network of friends and family. Many credit unions extend membership to relatives, or sometimes even friends, of current members.
• Make sure the credit union is federally insured. Just like there is FDIC insurance for banks, there is a program for credit unions as well. Confirm that any credit union you are thinking of joining is covered by the National Credit Union Share Insurance Fund (NCUSIF). That’s a federal program that guarantees that even if the credit union runs into financial trouble (not likely) you will get back every penny of your money on deposit, up to a general limit of $250,000.
Answer Yes or No to the follow statements.
I pay all my credit card bills in full each month.
I have an eight-month emergency savings fund separate from my checking or other bank accounts.
The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
I have term life insurance to provide protection to those who are dependent on my income.
I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
I have checked all the beneficiaries of every investment account and insurance policy within the past year.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.
As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!
But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.
Credit & Debt, Saving, Investing, Retirement