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5 Credit Unions Offering a Competitive Edge Over Big Banks

·4 min read
Farknot_Architect / Getty Images/iStockphoto
Farknot_Architect / Getty Images/iStockphoto

Big banks like Wells Fargo, Bank of America and Chase have something in common: You can find one within a reasonable distance almost anywhere you are in the nation. However, even though these financial behemoths make banking convenient, they can’t compete with the better APRs and lack of fees that many credit unions offer.

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“Credit unions are not-for-profit organizations, whereas banks are for-profit organizations,” said Andrew Lokenauth, a finance executive and personal finance expert. “Because credit unions are not-for-profit, they are taxed less than banks, so their fees and loan rates tend to be lower than banks, and interest earned on savings accounts tends to be higher for customers than at banks. Credit unions offer some of the lowest and best rates on credit products such as credit cards, car loans and mortgages due to being not-for-profit organizations.”

Here are five credit unions worth considering if you’re looking for more competitive financial products and services than big banks offer.

Navy Federal Credit Union

“In my opinion, the biggest and best credit union is Navy Federal,” said Corey Noyes, financial advisor and owner of Balanced Capital. GOBankingRates agrees. That’s why it ranked NFCU as the No. 1 credit union on its list of Best Credit Unions of 2022.

Noyes pointed out that if you can qualify for membership with Navy Federal Credit Union, you will earn lower interest rates on loans and higher rates on deposits. For example, Navy Federal offers 0.25% APY on its savings account, while big banks, such as Wells Fargo and Bank of America offer a much lower standard savings rate of 0.01% APY. And while NFCU offers new auto financing as low as 1.79% APR, Bank of America’s lowest rate is 2.49% APR.

Check Out: 85% of People Prefer Banking Online or With a Mobile App: What Are Your Best Options?

Eastman Credit Union

One reason Eastman Credit Union stands out is for its Beyond Free checking account, which has no monthly service fee and no minimum balance requirements — things that are common at big banks. Eastman also offers rates that are much more competitive than what big banks offer.

For example, Eastman Credit Union’s savings account offers 0.55% APY, which beats the 0.01% APY offered at many big banks. Plus, the credit union also offers a 1.10% APY on a five-year CD, whereas Chase’s best rate on a five-year CD is 0.05% APY. Eastman Credit Union offers personal loans too, while Chase does not.

Read More: Gen Z and Millennials Favor National and Online Banks, Survey Shows — What Does That Mean for the Future of Credit Unions?

Alliant Credit Union

“There are several reasons why Alliant Credit Union may be a better choice than the big banks,” said Andrew Bryant, personal finance expert and founder of Credit Weld. “For starters, Alliant is a not-for-profit credit union, which means that all of its profits are returned to its members in the form of better rates and lower fees.”

Bryant also pointed out that Alliant has no hidden fees and offers free checking and savings accounts. Big banks are notorious for charging fees on checking accounts. For example, Chase charges monthly maintenance fees up to $35.

“Another advantage that Alliant has over the big banks is its community focus,” said Bryant. “Alliant partners with local organizations to help promote financial education and empowerment in underserved communities.”

Alliant Credit Union’s High Rate Savings Account, which offers 0.55% APY, beats the standard savings rates many big banks offer by far, such as Chase, which offers 0.01% APY. Alliant also offers a High Rate Checking account that offers 0.25%, while Chase’s interest-bearing checking accounts offer just 0.01% APY. Additionally, Alliant offers up to 0.80% APY on certificates of deposit, while Chase offers only 0.01% to 0.05% APY on its CDs.

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American Airlines Federal Credit Union

American Airlines Federal Credit Union stands out for the 0.30% APY it offers on its Primary Savings account, which is very competitive if you consider the 0.01% APY savings rate that Chase, Wells Fargo and Bank of America offer.

The credit union also offers 0.70% APY on its five-year Dream Plan Share Certificate, which outshines CD rates offered at the biggest banks in the nation. For example, Chase offers up to 0.05% APY, Wells Fargo offers up to 0.02% APY, and Bank of America offers up to 0.05%. American Airlines Federal Credit Union also offers personal loans, while big banks such as Bank of America and Chase do not.

More Insight: 40% of Women Have Less Than $100 in Their Savings Accounts, New Survey Finds

Patelco Credit Union

The Patelco Credit Union account that stands way above what big banks offer is its Money Market Select Account. Big banks, such as Chase, Wells Fargo and Bank of America, do not offer money market accounts. And Patelco’s money market account offers a competitive 1.00% APY on the first $2,000; then it pays a blended interest rate on balances that exceed $2,000. You can see how that works by using Patelco’s Money Market Calculator.

Patelco also offers up to 0.70% APY on its certificates of deposit, which beat the rates offered by three of the biggest banks in the nation. And like other credit unions listed here, Patelco offers personal loans, which is another area in which many big banks cannot compete.

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This article originally appeared on GOBankingRates.com: 5 Credit Unions Offering a Competitive Edge Over Big Banks