Tuesday, September 24, 2013

The Benefits of Credit Unions

Bank of America is in trouble again. This morning, it was announced through the press that a judge awarded former applicants $2.2 million dollars in a race discrimination investigation that spanned two decades. The bank's offices in Charlotte, NC were found overlooking qualified African-American applicants for positions. 

Bank of America, which won the notorious label "too big to fail" after the government bailouts of 2008, is not the only bank facing lawsuits. Recently, Meryll Lynch was forced to pay out an award for the same grievance. A regulator is pursuing Morgan Stanley and seven other big banks for their involvement in the failure of two credit unions. This last case also leads back to the mortgage-backed securities mess of 2008. It's not rare lately to find those banks involved in that crisis make headlines now, and it's never good news. 

As many Americans, it has frightened me. I am worried about the direction these banks are taking both strategically and financially. Other times, I find myself angry at why these big banks were ever rescued. Over five years later, the nation is still feeling the ripple effects of the 2008 financial crisis. This has led many economists to continue calculating the damage and politicians wondering what to do next. 

Let's not forget the average citizen. Because of the financial latitude the mega banks have access to, they are able to market their services more. This overshadows the services of other available banking institutions such as credit unions. 

I recently started transferring my money to a local credit union. It had nothing to do with a bad experience with my current bank per se, but a major re-evaluation of personal values and fear of the unknown. No one can really predict for certain how long my large bank will actually stick around. I have long been considering this move, but caved in to misinformation. 

For one thing, there is a level of security when you invest in large banks.  Your money is secured up to $100,000 by the FDIC. The government and media is constantly scrutinizing these banks, so there is a sense of accountability. Although the last financial mess reveals otherwise, as customers we buy into the notion that the bigger something is, especially a business, the better its services. Mega banks have access to numerous securities and the all-in-one banking option is tempting.  

Credit unions don't have as much access to the level of services big banks do, and their small size is frightening. Mention one and there is the fear that one may not manage your money right for whatever reason.  What many don't realize is that credit unions offer customers several benefits. For one thing, deposits are backed by their own regulator, the NCUA. While they may not have access to a variety of securities as larger banks, they do offer several investments and at better rates. Even better, opening an account gives customers a share of ownership in the credit union. I was surprised to learn that several even offer a safe deposit box for a small fee. And don't buy into the ATM charges. Credit unions collaborate with other institutions to provide customers free access to ATM's in numerous locations nationwide. Plus they offer credit cards, checking cards, and loans. All in the safety of an overlooked little bank that has been overshadowed for far too long by its reckless public counterparts. 

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