Could Your Next Stockbroker Be a Credit Union?

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credit unions stock tradingCan a not-for-profit credit union give you the same level of service as a for-profit commercial bank? On many fronts, the answer is a resounding yes.

As I've previously written, credit unions have plenty of features that make them an attractive alternative to America's big commercial banks:
  • Good rates on loans: As a general rule, credit unions are run for the benefit of their members rather than for the benefit of owner-shareholders. As a result, they're often able to offer low interest rates on credit cards and other loans that few of their for-profit banking peers are able to match.
  • Competitive interest rates on deposits: Credit unions are often able to easily trump the national average of 0.1% interest paid on savings and money market accounts,despite having less loan interest revenue to work with.
  • Lower fees: And not for nothing, the majority of America's bigger credit unions have maintained the benefit of "free checking," when very few of America's big commercial banks still offer the service.
But for investors, there's still one big hole in the credit union story: stock trading.

In the competitive, complex world of banking services, it's a reasonable question: Do credit unions offer online brokerage accounts? Is there a credit union out there where you can -- as at many big banks -- open a checking account at a decent interest rate, sign up for a credit card, take out a car loan, and trade stocks, all in one shop?

As it turns out, there is. Or rather, there are. Quite a few of them, in fact.

Time to Meet the Broker

According to Bankrate.com, there were 7,351 credit unions operating in the United States at the end of 2011, handling nearly $1 trillion in assets and serving 93.9 million customers. (Here's a list of a few of the biggest credit unions that are open to everyone.)

Now granted, not all of these credit unions offer brokerage services. That's not surprising. After all, not all banks offer online stock trading.

What's actually more surprising is that quite a few credit unions do offer brokerage services, usually by teaming up with outside brokers.

A recent article in industry publication Credit Union Times, for example, described how INVEST Financial -- a subsidiary of Britain's Prudential (PUK) -- teamed up with nine separate credit unions, including $1.5 billion Texans Credit Union in Richardson, Texas, and $4.5 billion Bethpage Federal Credit Union in Bethpage, N.Y., to offer their members brokerage services.

This is not an isolated case. Here are just a few examples of credit unions offering online brokerage services today:

Credit Union Affiliated Broker Cost for a Basic Stock Trade
Visions Federal Credit Union BestVest Investment $24.95
Hudson Valley FCU BestVest Investment $24.95
Advantis Credit Union CUSO Financial Services $14.95
KeyPoint Credit Union CUSO Financial Services $14.95
Bay Federal Credit Union CUSO Financial Services $14.95
American Eagle Credit Union CUNA Brokerage Services $15
University Credit Union CUNA Brokerage Services $15
Numerica Credit Union CUNA Brokerage Services $15
Navy Federal Credit Union Foliofn* $10*


*Foliofn isn't a traditional discount broker, but rather, facilitates trading in "folios," or baskets of stocks at economical prices.

CUSO Who?

Now admittedly, most of these brokers aren't exactly household names. If you're looking for a credit union that's partnered up with a Charles Schwab (SCHW) or E*TRADE Financial (ETFC), you may be in for a long search.

As the first couple of letters of these brokers' names -- "CUSO" and "CUNA" -- suggest, at least some set up shop with the specific intent of targeting the specific market niche of Credit Union customers. That said, the brokers listed don't look to be fly-by-night shops.

San Diego-based CUSO Financial Services, for example, has been in business since 1996. CUNA Brokerage is a division of Madison, Wis.-based CMFG Life Insurance.

And of course, the commissions these brokers are charging for stock trades aren't the cheapest in the business, either. Not one of them comes close to the $7.95 commission that Fidelity advertises for stock trades.

Then again, if you're dead-set against patronizing big banks but don't want to give up on the idea of managing your own retirement portfolio -- you may not have to. There are options out there for people who'd like to switch to a credit union but who also want to keep trading stocks, mutual funds, and ETFs. You just have to know where to look.

With any luck, the information above will give you a good start.

Motley Fool contributing writer Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.


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Adam Konner

I was really excited to find this, but after looking into all of the credit unions on this list, it turns out not one of them is open to anyone to join. They all require living in one of a few select counties or working for certain companies. Do you know if any of the CUs on the "big list" you refer to (http://www.depositaccounts.com/blog/the-big-list-of-credit-unions-open-to-anyone.html) have online investment services, or are these the only ones in existence? Thank you!

July 09 2013 at 10:58 PM Report abuse rate up rate down Reply