Reader Jim Walls offers this advice about how to avoid banks entirely, but going to its socialist equivalent, the credit union. We thought it was an interesting, succinct explanation on why you might want to look at credit unions as the panacea for all our banking problems.

That is, of course, until a credit union screws you over.

Still, there is much merit to Jim’s argument. Have a taste.

Here’s the simple reality: Banks have shareholders who want to see a profit on their investment. So banks do everything in their power to get as much money from their customers as is legally possible while still remaining competitive with other banks. Here’s a case-in-point: Citizens Bank paid the Phillies $92 for the naming rights to their new stadium. Where did that money come from? Customer fees.

Most people just accept it. After all, what choice do they have?

I’ll tell you: Credit unions. The owners of credit unions are the members themselves. So there are no fat-cat shareholders to answer to. As a result, credit union profits are returned to members in the form of fewer fees and better interest rates.

And thanks to relaxed laws regulating who could and couldn’t join a credit union, virtually everyone in America can join at least one. I’m a member of three, myself–credit unions have killer car-loan rates to begin with. Being a member of three allows me to easily comparison shop.

Banks don’t want you to know about credit unions. They’re spending millions to lobby the government to keep them under wraps. And for good reason. If most people knew about the benefits, all the big banks would be out of business.

Some benefits of credit unions?

Checking accounts are usually free with no ridiculous minimum-balance requirements. You’re not going to get hit with fees for dipping into your overdraft. You can buy your checks at-cost. And there are no per-check fees or any of that other crap banks like to slip in while you’re sleeping.

How about ATM fees? Most credit unions are members of a national network of credit union ATMs, so you get access to literally tens of thousands of machines across the country with zero surcharge. Few, if any, credit unions charge you to use someone else’s machine. (Of course, the ATM’s bank will probably still hit you with a surcharge, but at least you’re not going to have to pay twice).

As for interest rates, credit unions consistently average better car loan rates than the bank, and even rival those offered at most car dealers (who are offering you teaser rates to get you in the door). Your savings, CD, money market, and mortgage rates are all going to kick ass too. When it comes time to finally move out of mom’s house and into your own home, you won’t have to pay all the shitty, sleazy “service,” “commitment,” and “underwriter’s fees”
AKA “junk fees”
that banks tack on to their mortgages. Better still, most credit unions won’t slam you with a several-thousand-dollar “prepayment penalty” like Bank of America did when I refinanced the mortgage I had with them.

When you look at the reasons most people use a bank (direct deposit, check cashing, bill paying, and ATMs), you’re going to save cash. Maybe as much as $100,000 over your life, by some estimates.

I don’t work for credit unions, I’m just a big fan. Of course, there are some credit unions that have lost a little focus and pull some of the same stunts as banks, but they are the exception and certainly not a rule.

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