Looking to save some money while you’re saving your money? Consider opening a checking account with a credit union instead of a traditional bank.
A new study from Bankrate found that credit unions are twice as likely as banks to offer new customers free checking accounts. In a survey of the nation’s largest credit unions, Bankrate found that 38 of 50 (76 percent) offer checking accounts without service fees or transaction charges, compared to 37 percent of traditional banks.
Free checking has grown increasingly rare at banks. As recently as 2010, 65 percent of banks offered free checking accounts. They began doing away with the practice in an effort to cut costs, especially after new regulations enacted in the wake of the financial crisis limited how much revenue they could earn from other fees like overdraft charges, Bankrate analyst Greg McBride wrote in an email. Customers now tend to use their checking accounts more frequently than in the past, making twice as many monthly transactions as they did 25 years ago. That has also added to banks’ costs.
Credit unions have largely bucked the trend — and they can be appealing for a number of other reasons, too. It’s generally easier to open an account with a credit union than a bank. None of the credit unions surveyed require consumers to deposit more than $100 to open an account, and two thirds lack any minimum. Although some banks don’t need a minimum deposit, the ones that do can require as much as $25,000.
Credit unions also tend to offer their members better ATM and overdraft fees. Roughly a third don’t charge for visiting out-of-network ATMS, or at least offer one free withdrawal from such machines. Overall, the average fee for taking cash from out-of-network ATMs is $4.52 per transaction. The average credit union has an overdraft fee of $27, while the average bank has a slightly higher cost of $33.
Those benefits don’t necessarily mean that credit unions are the best choice for every person and every financial situation. They tend to have fewer physical locations and offer a narrower selection of financial products than traditional banks. Bankrate analyst Greg McBride recommends choosing the institution that offers the best deal on the financial product you want: “You may have your checking account with a credit union and your mortgage or car loan with a bank.”
But if you’re looking for a free checking account, credit unions may be your best bet.