Credit unions provide better interest rates on customers' checking and savings accounts than other financial institutions, according to a report from personal finance social network WalletHub, a unit of Evolution Finance.

Credit unions also charge lower average fees than their banking counterparts.

In its "Q4 2014 Banking Landscape Report," WalletHub studied the fees, features, and interest rates on more than 2,000 checking accounts, savings accounts, money market accounts, and CDs from a variety of financial institutions, comprising small banks, regional banks, national banks, community banks and, of course, credit unions.

Specifically, the report noted that credit unions, on average, charge the lowest monthly fees on checking accounts ($1.87) compared to various banking categories. Indeed, national banks, at $14.88 charged the highest monthly fees among this group. The next lowest fee-charger, community banks, clocked in at $5.74, more than three times the fee charged by credit unions.

Credit unions also charged the lowest overdraft fees, lowest paper statement fees, lowest insufficient funds fees and lowest non-bank ATM fees on checking accounts.

However, on average, credit unions required the highest minimum balance to avoid monthly fees — at $11,500 — almost four times the $2,930 figure for community banks. In addition, credit unions also charged relatively high online bill pay fees ($0.80 average) ranking them second just behind community banks ($0.89); with national banks charging only $0.12.

On the whole, Wallet Hub awarded credit unions with a "checking account fee index" of $22, the lowest figure among all the institutions surveyed, with national banks scoring the highest at $75.

Taking into account the composite features of checking accounts offered by financial institutions, credit unions again ranked at the top, scoring a "checking account features index" of 42.95%, versus a figure of 24.18% for national banks. Drilling down further into the data, for example, the report noted that more than three-quarters (76.67%) of accounts offered by credit unions charged $0 monthly fees with no minimum requirements (versus only 3.57% for national banks). Also, a whopping 85.19% of credit unions charged no paper statement fees, versus a corresponding figure of only 26.09% for community banks. Perhaps most impressive, exactly two-thirds of credit unions (66.67%) offer customers the chance to open up a checking account with $0 minimum balance — in contrast, only 6.25% of regional banks and just 8.89% of community banks boast this feature.

Credit unions also delivered superlative numbers with respect to interest rates on interest-bearing checking accounts. Wallet Hub data revealed that regardless of minimum balance considerations, credit unions paid out the highest interest rates on checking accounts. For example, on checking accounts with a minimum balance of $1,000, the average credit account paid out interest of 0.51%, dwarfing the 0.06% figure for national banks, and 0.04% for regional banks.

Credit unions also paid out the highest interest rates on savings accounts — regardless of the customers' minimum balance. For example, for customers with a savings balance of at least $10,000, the average credit union delivered an interest rate of 0.23%, far outdistancing the corresponding figures for community banks (0.14%) and national banks (0.04%)

The same held true for CDs — credit unions generally paid far higher interest rates on these accounts than banks. For instance, on a one-year CD, credit unions, on average, paid an interest rate of 0.52%, versus 0.18% for national banks (the lowest figure)

A spokesperson for Wallet Hub, Jill Gonzalez, told Credit Union Journal that the latest report confirms a consistent trend- namely, that credit unions offer lower fees and higher interest rates than banks, and often by substantial amounts.

Dennis Dollar, an Alabama-based credit union consultant, explained that credit unions, by virtue of their structure as not-for-profit cooperatives owned by their members rather than stockholders wanting a major return on investment, have historically paid a few basis points more on a savings or checking accounts than a for-profit bank — "for the same reason that credit union loans are normally a little less costly because the stockholder return does not have to be factored in."

The biggest difference today on deposit accounts is that credit unions have been proven to be much more reasonable on fees than their competitors, again largely because of the not-for-profit structure, Dollar said.

"The fee differential on both checking and savings accounts is one of credit unions' biggest selling points," Dollar added.

But another credit union expert, Ben Rogers, research director of the Filene Research Institute, cautioned that checking and savings accounts at credit unions are not always better deals than similar products found at banks.

"When [credit unions] are better it's because the interest rates [they pay] are a little higher," Rogers told Credit Union Journal. "That's true on average for credit unions, but not for every credit union. Larger credit unions generally offer the better rates. They're [also] better with second chances on fees or lower fees."

However, Rogers added, credit unions are very often worse with respect to access, especially compared to the biggest banks. "Customers will pay for convenience, even if it means higher fees and worse customer service," he stated. "Chase and Wells Fargo figured out a long time ago that people will put up with a lot of fees and terrible rates if their online banking and mobile experience is fantastic. The big banks have a big head-start on user experience, on mobile tools, and on services that work seamlessly."

Michelle Dosher, managing editor at CUNA, noted that credit unions generally offer lower rates on loans, higher returns on savings, and lower and fewer fees than banks.

“Last year, on average, each credit union member got a direct financial benefit of $62,” Dosher told Credit Union Journal. “That came from lower rates on loans, higher returns on savings, and lower and fewer fees than he or she would have paid by doing business with a bank. But that $62 benefit is only an average. Active members who use many credit union services often see even greater benefits.”

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