There are three primary reasons to consider investment in a S&L: competitiveness, flexibility and innovation. Do I sound like a fan yet? You bet...I’ve been a credit union member since graduating from high school.
Competitiveness
If you have watched the classic movie “It’s a Wonderful Life,” you’ve seen a humorous take on of practices of the original credit union. The 3-6-3 practices… “Save at 3%...lend at 6%...golf at 3 o’clock”. Fortunately, in more recent history, credit union interest rates have been saving consumers an average of .5-1% off of bank prime.
Savings and Loan success has for years been based on a higher rate of savings for its members in comparison to banks. Membership in credit unions makes lending democratic, which means that individual institutions develop priorities based on their communities. Shareholder-ownership in S&Ls can translate into tangible benefits for you. Hence the name “savings AND loan.” We save, while they loan.
When shopping for an S&L, I recommend looking for a mutual S&L (ask the member services representative about its management team), and specifically for details about the S&L lending rates in comparison with traditional bank prime rates for the past two years. If you anticipate purchasing a big ticket item in the near future, the reality is that the interest savings on an S&L loan in comparison to traditional bank rates could add up to one huge difference. Now that is competition.
Flexibility
Probably because some financial services are better matched for consumers than for institutions, Savings and Loans actually have been ahead of old-fashioned banks in offering options that demonstrate flexibility. Every Savings and Loan should offer certain services… The following is a checklist of essential services to look for in a Savings and Loan:
- Savings and Checking Accounts
- Personal Loans and Lines of Credit
- Mortgages
- Savings Bonds
- Mutual funds
- Term Deposits
- Credit Cards
- Debit Cards
- Travelers’ Checks
- Internet and Telephone Banking
- Retirement Planning
A word about retirement planning is in order. It is my consistent experience that S&Ls provide some of the best advice on money management for retirement that you can get. This is especially true if you are lucky enough to be in a long-established trade, having its own credit union.
Innovation
In addition to basic options, progressive credit unions also offer:
- Consumer Loans
- Daily Interest Savings
- Automated Banking Machines (ABMs)
- Flexible Mortgage Payments
- Line of Credit Reverse Mortgage
- Payroll Deduction
- Socially Responsible Mutual Funds
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