Credit Unions Gaining on Banks and S

The announcement this week by the American Assn. of Retired Persons that its credit union has gone national, offering attractive rates on credit cards and deposits, is the latest example of the growing popularity of the nation's more than 16,000 credit unions.

It also shows how you should consider credit unions as alternatives whenever shopping for places to deposit funds or obtain loans.

Credit unions--once mainly sought out for auto loans or other borrowings--now often offer superior rates on many other services also provided by banks and savings and loans. Two of three credit union members nationwide can now get credit cards and home loans through their credit unions; four in five can get checking accounts (called share drafts at credit unions).

Some credit unions even offer access to automated teller machines, discount brokerage, small-business loans, insurance or financial planning. And credit union deposits are covered by the same type of federal insurance as banks and S&Ls.;

Happier Customers

Credit unions' wide and attractive product spectrum--and liberalized membership eligibility requirements in recent years--is expected to revive attempts by banks and S&Ls; to curb their tax-free status, which, banks say, give credit unions an unfair advantage. Credit unions respond by noting that they operate as non-profit services for members.

Consumers appear to be voting increasingly for credit unions in this battle, as assets in the institutions have doubled since 1982. Also, consumer surveys by American Banker, a trade newspaper, show that credit union customers consistently express higher satisfaction with the quality of services than bank and S&L; customers.

A survey last November by Consumer Action, a San Francisco group that tracks rates at credit unions and savings institutions statewide, showed that all but one of eight California credit unions surveyed offered credit card interest rates at or below 15.6%. Only six of 34 banks and S&Ls; surveyed offered rates that low.

Another Consumer Action survey in March found that nine of 17 credit unions surveyed had no monthly fees on interest-bearing checking accounts.

Only two of 80 banks and S&Ls; surveyed offered free interest-bearing checking accounts at all minimum balance levels.

"Banks tend to have more fees and to charge more, and credit unions tend to have fewer fees and to charge less," says Michael Heffer, senior staff member at Consumer Action.

Easier to Join

The AARP entry appears to fit the pattern. Its credit union, which this week became available to all of the group's 29 million members aged 50 and over (it previously had been offered only on a limited test-market basis), offers a Visa card with an attractive annual interest rate of 14.9% and an annual fee of $10.

Another key advantage: It may grant credit to some senior citizens who may not qualify with banks or S&Ls; because they lack credit histories or are retired.

Joining a credit union, if you don't already belong to one affiliated with your job or favorite membership group, has become much easier in recent years thanks to the deregulation of the industry. You may be eligible to join and not even know it. Many credit unions will allow as members people living in certain counties, or within a certain distance of their headquarters. You could join many credit unions simply if relatives belong to them.

"Some credit unions in California have very broad fields of membership where virtually anyone can join," says Sonia Mann, information specialist at the California Credit Union League in Pomona.

For example, all California residents can apply to join Long Beach Community Credit Union, regardless of occupation or other affiliations, says its president, Marilee Jones Cofield. Its product line is limited, however, she says.

The California Credit Union League offers a credit union match-up service at (714) 628-6044. Ask for the research and information department. They will help you find credit unions that you might be eligible to join. You will be asked for information about such things as your job, employer, military experience and group affiliations. You also may be advised to contact your local Chamber of Commerce or relatives who already belong to credit unions.

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