New Year, New Account: 4 Reasons to Choose a Credit Union

Whether it’s the sky-high fees for checking accounts or too-tight standards for loans, many people have become disenchanted with their banks. Fortunately, they’re not the only option. If you’re unsatisfied with your bank, you can take your business elsewhere.

That “elsewhere could be a credit union. Over 96 million Americans currently use one for various economic and service-related reasons. Here are a few reasons you might want to do the same.

1.     Great Interest Rates

Credit unions generally outperform banks in terms of interest rates. Here are a few highlights from the National Credit Union Administration’s (NCUA)latest report:

        Credit unions, on average, have nearly (and in some cases more than) double the interest rates of banks on all types of CDs  (Share Certificates).

        Credit unions’ interest rates on checking, money market and savings accounts are more than double those offered by banks

        Credit card interest rates are slightly lower at credit unions (10.99%) vs. banks (11.82%)

        Both new and used car loan rates are significantly lower at credit unions, and credit unions often provide discounts for members

        Home equity loans carry lower rates at credit unions

Rates vary from institution to institution, so contact your local credit union if you’re looking for specifics. But know that, in almost every case, you’ll save money by using a credit union. 

2.     A Commitment to Financial Education

Credit unions operate on a not-for-profit basis. That is, unlike banks, which have an incentive to sell as many services as possible, credit unions typically offer more objective advice. Take advantage of this by finding a credit union that offers financial education services, including valuable credit card tips and seminars on other financial topics.

3.     More Flexible Loans

Due to default risks and other economic realities, banks often shun those who are in a tight financial spot, even temporarily. Thus, if you’re still trying to build credit, or you’ve made a few mistakes, you might be out of luck when applying for bank loans. However, since they’re typically focused on helping others instead of on profits, credit unions often have more flexible loan standards.

4.     Personalized Service

Credit unions consistently outperform banks in customer service. According to the latest American Customer Satisfaction Index (ACSI), credit unions received an 85 out of 100. The biggest banks scored from 69 to 76, depending on the specific institution, while all other banks scored an 83.

Final Word

With better interest rates, better service and better loan policies, there’s no reason not to join a credit union – especially not eligibility. While credit unions once typically served employees of a specific business, many of their membership requirements are now more inclusive. You can often join because you live and/or work within a city or neighborhood. In addition, once you’ve joined, your family members tend to also be eligible for membership. So if you’ve resolved to save more in 2014, there’s no better way to start than by joining your local credit union.

Alice Holbrook, NerdWallet

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How to Recover From Holiday Spending

While many people consider the holidays the best time of the year, they’re undeniably also the most expensive. Between the costs associated with hosting and attending holiday parties, buying gifts, purchasing items to decorate your home, and all the other expenses, many people start the New Year in a not-so-stellar financial state.

If this sounds familiar, don’t stress. There are many quick and easy ways to pay off your holiday credit card debt and replenish your savings account in no time at all. Follow these 7 tips to pay off holiday debt and regain control of your finances.

Return Unused and Unwanted Gifts

Let’s face it everyone gets holiday gifts they don’t actually want. Instead of letting these items collect dust in your home, return them to the store to get a little extra money. Even if you don’t have the receipt, most stores will give you merchandise credit, which you can certainly put to good use. The same rule applies to unused gifts. If you bought gifts for people and never actually gave them out, return the items to the store, get a refund and put the extra money towards paying off your credit card debt.

Create a Budget

You have to be in control of your finances to create a strategy to pay debt off. Write down and calculate all your necessary monthly expenditures, such as rent or mortgage payments, transportation costs, and utility expenses. Then add up your total amount of debt. Use this total to make a budget that’ll help you pay off debt and avoid accruing even more.

Transfer Balances to One Credit Card

While not always the best move, consolidating your credit card balances onto one card can save you a great deal of money. Before making the move, compare interest rates, see if there’s a fee to complete the transfers, check the terms of each card and consider your credit limits on each card. If you’re able to find a credit card with a lower interest rate and attractive terms and conditions, not only can this save you money, it can also help to raise your credit score.

Use Your Tax Refund to Pay Off Debt

Everyone loves getting the extra springtime “tax bonus” each year. Instead of spending yours freely, dedicate the full refund to paying off your holiday debt. While it might be tempting to spend the funds on a new bag or a vacation, think of how good you’ll feel by getting closer to being debt-free.

Cut Back on Expenses

Save extra money by cutting back on non-essential spending. For example, if you typically eat out most days of the week, start bringing your lunch to work and stay in for dinner all but a couple nights per week. Or if you’re a bit of a shopaholic, vow to stop buying new clothes until you’ve paid your holiday debt off.

Save Cash Gifts  

If you received monetary gifts this holiday season, you’re probably filled with ideas of how you’d like to spend the funds. While you’re probably not going to want to hear this, saving that money and putting it toward the debt you incurred during the holiday season is the most financially savvy thing to do. The longer you let balances sit on your credit cards, the more interest you’ll incur, making your debt even greater. So use the money to bring your debt levels down and then save up to reward yourself for your sacrifices in a few months.

Earn Extra Income

If your job offers overtime pay for working extra hours, put in a little more time at the office to earn additional income. Getting a temporary part-time job is another great way to supplement your regular income and get those debts paid off fast.

See a Financial Counselor

It’s never easy to ask for help, especially when it comes to your money. But seeing a financial counselor, who can help teach you how to budget and get yourself out of debt, can make a world of difference.

Final Word

The holidays are a pricey time of year. We are all susceptible to getting carried away with expenses, as we want to give our loved ones the world. If you’re feeling overwhelmed with debt, don’t worry! With a little savvy planning and a bit of financial sacrifice, you’ll be back on your feet in no time at all.

Damaris Olaechea, NerdWallet

Credit Union Blogs – NerdWallet’s Picks

We were thrilled to read, NerdWallet selected our Blog as a top pick among Credit Union blogs.  Nerdwallet.com is a great website loaded with information.  Take a moment to review the article featuring Hopewell Federal Credit Union and be sure and sign up for their mailing list.

Credit Union Blogs – NerdWallet’s Picks.