The benefits of credit unions

There is a great post by the blog at phroogal.com, a website dedicated to giving people practical financial advice. The post (link at the bottom of this page) deals with the topic of credit unions.

I wanted to take the opportunity to chime in on the topic myself. In case you don't already know, a credit union is a financial institution similar to a bank. The difference is that banks are established to make a profit; credit unions are not-for-profit institutions, as established by federal law. So you can go to a credit union to open a savings account, take out a loan, open investments like a 401(k), and so on. Anything you can do at a bank, you can do at a credit union. The only restriction on membership for many credit unions is that you have to live in a certain geographical area.

The benefit of using a credit union is that the loans usually feature a lower interest rate, and the savings/checking accounts sometimes pay higher interest rates as well. Granted, this varies from institution to institution, as well as from one point in time to another. But the general trend holds--since credit unions aren't out to make a buck, they can be a little more generous to their members.