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Should you get a loan from a credit union?

[Jul 15, 2011.]

 

Membership in credit unions rose by more than 300,000 in the first quarter of 2011, according to the National Credit Union Administration. A growing number of consumers are turning to credit unions rather than banks because they are tired of having fees increase while customer service declines. Whether you're looking for a personal loan, credit card or savings account, it may be worth considering joining a credit union.


Credit unions are not-for-profit institutions that are owned and controlled by their members. The members can vote for credit union officials and have a say in how they are run. Generally, credit unions offer lower interest rates on loans and credit cards and higher rates on savings accounts.


Credit union loans


The process of applying for a personal loan through a credit union is often not as tough as at a bank. While you will need a good credit score to get the best interest rate and the ability to repay a loan, credit unions may take other factors into consideration. In some cases, a loan that has been rejected might be reconsidered if you appeal to the decision makers.


Other services offered


Depending upon the credit union you join, services that are offered may include first-time home buyer programs, financial classes and counseling. Accounts also may include free overdraft protection, direct deposit and ATMs with no fees.


Join a credit union


A lot of people think you can only join a credit union that is affiliated with a particular employer or organization. But some credit unions are available to people who live in a certain geographic area. Others may be open to members of churches, labor unions, the military or home owner's associations. Check around to see what credit unions are available in your area and the requirements to join. The average cost to join a credit union is about $5 to $10, according to the National Credit Union Administration (NCUA).


Once you join you will be eligible to open checking and savings accounts or apply for a loan. If you join a credit union through your employer, the payments for a personal loan may be deducted from your paychecks. This can be a good way to stay current on bill payments, which can help improve your credit rating.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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