This article is reprinted by permission from NerdWallet.
Generally, credit unions allow you to join based on where you live, work or worship, like this one based in Hawaii’s Big Island.
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In the past year, the Federal Reserve has employed several interest rate hikes in an effort to stabilize the U.S. economy. Depending on your situation and financial institution, your debt may have gotten more expensive or your savings might have grown. As rates continue to change, it’s worth exploring whether you’re still getting the best offer around.
Compared with big banks, a credit union can offer decent rates for stashing your cash or borrowing money, especially during these economic times. “For folks who are looking for loans, they can often find a credit union with lower rates because credit unions are willing to spend some of their would-be profits on lower rates,” says Andrew Leventis, chief economist at the National Credit Union Administration, or NCUA. “That’s one way, traditionally, credit unions have helped out their members, particularly in times when you have rising rates and there’s more of an urgency to getting the best deal.” Here’s what you should know about these not-for-profit cooperative financial institutions and their potential to offer big savings. Plus: Amid bank turmoil, concerns mount about financing drying up for home builders — and home buyersHow credit unions work Unlike banks that have shareholders to consider, credit unions return their profits to members like you. They offer many of the same products and services that banks do, but those might go by different names. For instance, a checking account may be referred to as a “share draft account.” Credit unions may also belong to an ATM network that allows you to perform transactions beyond a specific branch. Generally, credit unions allow you to join based on where you live, work or worship. Other avenues may include joining through a family member or making a small donation to a charitable partner organization. “We’re required to have a field of membership, so the member coming in to open an account has to provide proof of that affiliation,” says Jim Norris, president and CEO of SkyPoint Federal Credit Union, an institution that serves counties in Maryland, Washington, D.C., and Virginia. There’s typically a one-time membership fee to join a credit union, sometimes as low as $5, which may be used to open a savings account. Read: Are your deposits safe? Where should you put your cash amid banking fears? Financial advisers offer tough love.How credit union rates compare Profits at credit unions are returned to members in the form of low fees, better rates on loans and higher rates on savings. The rates for specific products will vary by credit union. For instance, in the last quarter of 2022, the national average rate for a “classic” credit card was 11.96% at credit unions and 13.34% at banks, according to data extracted by the NCUA from …