How and Why I Switched to a Credit Union

Credit Union photoBy Cathy Habas, Guest Contributer, with input from SenecaOne

Back when the Occupy Wall Street movement was taking shape, I was the perfect target demographic for the cause: a college student with an impressive amount of debt already weighing down my bank account.

Naturally, with big banks being loudly criticized, credit unions and small banks were presented by the Occupiers as an alternative way to keep money safe and to obtain loans.

It was the first time I ever stopped to think about where I kept my money and why.

A Member, Not a Dollar Sign

Honestly, before I bothered to ask questions and do a little Googling, I thought a credit union was just a bank under a less imposing name. And in a way, it sort of is. You can get the same services at both: savings or checking accounts, debit cards, loans, etc.

But the big difference is that credit unions operate as nonprofits, whereas banks make money from high interest rates, overage fees, withdrawal fines, and more. Credit unions are small and local, meaning that your membership can help serve your own community, and that you’re likely to get very personalized service. A credit union is a place where “everybody knows your name.”

Discovering that credit unions had low interest fees lit a little fire under my feet. I was annoyed enough at hearing about greedy, profit-mongering big banks that I wanted to be another drop in the bucket, so to speak, and switch to a credit union.

In other words, I wanted to be treated like a member and not a dollar sign. I decided to make the leap, and here’s what I learned along the way.

Finding the Right Credit Union

Banks usually let anyone with money open an account, but credit unions can be a little more exclusive. Some have open membership policies, while others are only for employees of a certain company.

For me, low-interest loans were a huge factor in determining which credit union I wanted to join. Accessibility was another biggie. If I needed to go to the credit union’s office (versus handling my account over the phone or online), I didn’t want to have to drive across town to get there. I also needed a credit union with an open membership, or at least without strict restrictions on who could apply for membership.

Once I had a short list of credit unions, I asked friends for recommendations. Customer satisfaction says a lot. I wanted to know which credit unions my friends had experiences with, and which ones they loved and which ones they would never recommend. Keep in mind that sometimes there are perks for you and your friend if you join based on their referral, so joining a friend’s credit union could be advantageous if there are otherwise no real differences among your choices.

Making the Switch

Making the switch from a bank to a credit union sounds like a laborious process, but it’s actually pretty straightforward. First you set up your credit union account, deposit some money in it, and then systematically change all of your automatic deposits and bill payments so that the money is taken from (or put into) your new credit union account. Doing this gradually over the course of a month or so is recommended, just in case you miss something along the way or encounter an error. Finally, when you’re confident that your credit union account is now connected to all automatic channels, you can withdraw the last of your money from your bank account and close the account.

You might be wondering if you’ll get any obnoxious push-back from your bank, but you can switch banks pretty quietly. You can typically open and close accounts online if you’re like me and you’d rather not do it over the phone or in person.

So unless you want to make a big scene of your switch, you don’t have to have any tense conversations with bank employees about your desire to leave. And even then, unless you have a large amount of money in your account, where your absence will really be felt and taken as a loss, you shouldn’t have to worry about being dragged into an office and begged by the bank manager to stay.

By using the gradual move method, the bank will hardly even notice until it’s too late. When closing your account, you might be asked to take an exit survey. Take this opportunity to tell the bank why they failed to retain your business. Maybe it won’t really make a difference to how they operate, but then again, maybe it will.

Was it Worth It?

I wouldn’t be writing an article on how and why I switched from a bank to a credit union if I didn’t think it was worthwhile, but let me just reiterate: it has definitely been a good decision. As I continue to pay off student loan debt that is attached to big banks, I am really appreciative of the flexible loan options at my credit union. There are skip-a-payment months, which let me keep a little more money in my pocket every now and then, there are no rollovers, and did I mention the low interest rates?

If you’re on the fence, I encourage you to open a credit union account. You don’t have to close your bank account right away. Just try it and see what you think.

Cathy Habas is a professional writer, editor and Spanish to English translator. She has written hundreds of articles under her name and as a ghostwriter.


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