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Credit Unions Can Save You Money pt.1 - Cambridge Credit

2010's new overdraft & debit card fee restrictions are "losses" to banks that formerly charged the fees, so now banks are ending free checking. Consider using a not-for-profit credit union to save money.

2010's new overdraft & debit card fee restrictions are "losses" to banks that formerly charged the fees, so now banks are ending free checking. Consider using a not-for-profit credit union to save money.
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Video Transcription: Credit Unions Can Save You Money, Part 1 of 2 - Cambridge Credit's Thomas J. Fox:

Hello, and welcome to Your Money 2.0. I'm Thomas Fox, Community Outreach Director at Cambridge Credit Counseling. In 2010, new regulations were introduced to rein in ovrdraft fees and fees assessed on debit card transactions. Consumers and merchants embraced the new rules and the relief they seemed to provide.

The new regulations were supposed to save the public billions of dollars, and theoretically they'll do just that, but those "savings" are "losses" to the institutions that formerly charged the fees.

It's estimated that limiting overdraft fees will cost the banking industry tens of billions - that's billion with a "B" - and that caps on merchant fees will cost them billions more.

One way the banks can offset these "losses" is to phase out free checking accounts. Depending o where you bank, paying for checking could put a sizeable dent in your annual budget.

So far, we've heard from several major banks that have introduced checking fees ranging anywhere from $6 to $30 a month. You can generally avoid these fees if you maintain a minimum balance (anywhere from $1,500 to $5,000), deposit a certain amount each month into your accounts, or link your mortgage or credit card to an existing account.

The new fee structures can be difficult to comprehend, and let's face it, don't youhave better things to do than figuring out a way to avoid these fees?

Sure, it's in our best interest to fully understand each aspect of our financial lives, but outmaneuvering the banks can sometimes be a little like playing "Pitfall" -- there seem to be an endless number of obstacles in your way, and the odds of winning often seem remote, at best. With all the demands on our time (friends, family, career, and life itself) do we really need to develop a plan to avoid hundreds of dollars of fees each year for a service tht used to be free?

Then again, as a wise American once said, "A penny saved is a penny earned." Well, as it turns out, there is another way that you might want to consider. A fantastic alternative to using a for-profit bank is to become a member of a not-for-profit credit union.

The first credit union in the U.S. was established in New Hampshire in 1908. But it wasn't until 1934 - at the height of the Great Depression, that Congress, with the enthusiastic support of President Franklin D. Roosevelt, passed the Federal Credit Union Act, which enabled credit unions to be formed in all states across the nation. FDR noted that the legislation would promote thrift and thwart usury - that is, excessive interest charges.

Today, there are more than 7,000 credit unions in the United States, with just over 90-million members. Because of the typical not-for-profit credit union's operating philosophy and not-for-profit status, they are able to beat banks in nearly all categories of loan interest rates and fees.

I recently spoke with orriss Partee, founder of the Everything CU website for credit unoion professionals, and he provided a wealth of information about the benefits of using creait unions, most of which we'll cover in Part Two of this series. One items that struck me right away was the philosophy by which credit unions operate - the Seven Cooperative Principles. These include policies such as open membership, democratic control, member economic participation, autonomy, education, cooperation, and concern for the community. These principles work in unison to ensure that the best interests of members are upheld. Essentially, you, the member, actively particapes in setting policies for the betterment of all members -- how about that for a change?

As if lower interest rates and fees weren't enough, another stunning benefit of credit unions is the sharing of revenues. That's right, if there are surplus finds, they are generally returned to members - you and me - in the form of dividends. When was the last time your bank sent you a check for doing business with them?

If this information isn't enough to make you consider a credit union, tune into Part Two's video when we'll dig deeper into how a credit union can save you time, money, and a bit of your sanity.

Well, that's it for this edition. Thank you for watching. Until next time, I'm Thomas Fox for Cambridge Credit Counseling. www.cambridgecredit.org

2010's new overdraft & debit card fee restrictions are "losses" to banks that formerly charged the fees, so now banks are ending free checking. Consider using a not-for-profit credit union to save money. Do More... For Less with the Money-Saving Tips & Videos on SpendLessTV.com - Get More for Your Money, and Your Life!