Lake Michigan Credit Union says that as a non-profit, financial institution, it can offer better interest rates and lower fees than commercial banks and lenders.
But do credit unions always offer lower fees and interest rates than commercial companies?
Also, are interest rates and fees the only things you need to consider when choosing a credit provider or banking service?
Are you considering opening a bank account, applying for a credit card, shopping for a mortgage or auto loan, or taking out a student loan?
If so, it's a good idea to compare a credit union like Lake Michigan Credit Union to other financial services companies to make sure you choose the best option for you.
Let's take a look at credit unions vs. commercial banks and lenders.
Then we'll see how Lake Michigan Credit Union stacks up against not only banks but also other credit unions.
What are Credit Unions and how are they different from banks?
Credit unions often start as a financial services company for people with a similar interest, such as teachers or veterans.
The good news is that you don't need to be a part of that group to join most credit unions because many are now open to the public.
I know I was hesitant about credit unions in the past, assuming that it was hard to qualify as a member.
The truth is, the more members, the more everyone benefits—which means it's actually pretty easy to join these days.
The reason credit unions often offer better products than commercial lenders is because they're non-profits.
This means they pay no federal or state income taxes.
Credit unions return any "profits" they make to their members in the form of reduced interest rates on credit cards and loans, or higher interest rates on savings accounts.
Credit union products often have no annual fees, minimum account balances, or late fees.
They offer other benefits that banks, credit card companies, and auto lenders can't.
Commercial companies, however, are often larger than credit unions and need to stay competitive with other banks and lenders.
This drives them to offer more services, benefits, and conveniences.
This is especially true when it comes to offering the latest technology, money management tools, and the number of branches and ATMs available.
Credit Unions and Big Banks
What are the advantages of choosing a Credit Union over one of the big banks?
If you're wondering if a non-profit financial services company can compete with a large for-profit lender, rest easy.
Both must meet the same legal requirements for lending, but since credit unions are under less pressure to make profits, they can offer the following benefits for-profits financial companies can't:
Lower interest rates. The National Credit Union Association compares credit union interest rates to commercial lenders each month.
Their December 2017 comparison found that credit unions offered lower interest rates in almost all instances, with vehicle loans often half the rate of commercial lenders.
Easier access to credit. Unlike commercial lenders, credit unions are more willing to work with you if you have a lower credit score.
Lower fees. Credit card companies make more than 30% of their annual income from charging you cash advance fees, late fees, annual membership fees and other fees.
Credit unions often have no fees or very low fees attached to their financial accounts and products.
Better investment returns. Both commercial and non-profit lenders offer low-interest rates on savings products like certificates of deposit or checking accounts.
If these are your only options for trying to earn extra income, a credit union will most likely pay you a bit more interest than a commercial lender.
Free ATM access. I remember when ATMs first came on the scene.
Banks told us that by using fewer humans (tellers), their costs would go down and they'd pass the savings on to us.
I soon learned about ATM fees, and how this new "service" actually cost me money if I didn't pay attention.
Many people often assume that large banks have lots of ATMs you can use to withdraw money, while small credit unions, don't.
In reality, many credit unions belong to a network that gives their members free access to ATMs across the country.
In some cases, your credit union will reimburse you if you have to pay a fee for using an ATM that's out the credit union's network.
For example, LMCU will refund up to $15/month in surcharge fees if you have one of their Max Checking accounts.
Better customer service. Belonging to a credit union is like belonging to a family.
When you join, you become a member and in a way, the people who serve you also work for you.
This means you'll be more of a name, as opposed to a number, when you join a credit union.
Digital banking. For many years, credit unions couldn't compete with large banks when it came to online banking services, such as paying with your phone, moving money from one account to another, auto pay, or check deposits.
However, that gap is closing fast, and depending on your credit union, you might get all of the online banking tools you want.
We'll discuss LMCU's online banking options below.
In my experience, credit unions tend to be able to match all your financial needs better, and cheaper, than a bank.
Credit Unions and Security
Is Lake Michigan Credit Union stable?
Lake Michigan Credit Union has been around more than 85 years, has more than 5 billion in assets, serves more than 300,000 customers at 49 locations, and has more than 1,000 employees.
Bankrate.com gives LMCU five out of five stars for safety and soundness.
Most financial institutions rated by the website receive three or four stars.
Bankrate.com also gave LMCU a perfect score for its asset quality.
LMCU's earnings score was above the national average, but its capital score (based on the total amount of LMCU's assets) was below the national average.
Lending Tree's DepositAccounts.com website gives LMCU an A+ health rating, ranking it #20 on its list of the top 200 credit unions in the U.S.
The website says that Lake Michigan Credit Union "… consistently ranks well among credit unions for dividends paid back to members."
Commercial banks offer accounts insured by the Federal Deposit Insurance Corporation, protecting up to $250,000 of your funds.
To remain competitive, credit unions set up their own account insurance program.
Like the FDIC, the National Credit Union Share Insurance Fund protects up to $250,000 of your deposits at most credit unions (check yours to make sure it is part of this program) and LMCU is insured through this program.
Requirements for Joining
There are some requirements to be eligible for membership
Like many credit unions, Lake Michigan Credit Union is easy to join.
People who live or work in LMCU's service area (areas of Florida and Michigan listed on the website) members, or who are family members of an LMCU member, can join free.
People who make a $5 donation to the ALS Foundation are also eligible to join.
The signup process takes a few minutes online and requires your Social Security Number, driver's license number, and $5 to open a savings account.
You'll need to fill out a short application, as well.
Products and Services
LMCU offers all of the financial products you may need from your Credit Union
Lake Michigan Credit Unions offers a basic savings account, three different types of checking accounts, a children's savings account, a health savings account, money market, IRA, and a Holiday club.
Checking and Savings. LMCU offers a basic, no-fee checking account, and its Max Checking Account.
Max Checking has no minimum balance requirement, charges no monthly fees and pays 3% interest on balances up to $15,000 (a potential $450 in interest per year).
Max Checking comes with a free VISA debit card and reimburses you up to $15 per month for out-of-network ATM fees.
Credit Cards. LMCU offers two consumer credit cards.
The Max Rewards card offers 3% cash back on fuel purchases up to $500 per month, 2% back on grocery and restaurant purchases, 1% on other purchases, free car rental insurance, and other perks.
The card offers low variable or fixed rates, updated daily on LMCU's website.
The Prime Platinum Visa is a low-interest card for those who carry a balance.
The card lets you transfer a balance from other high-interest cards or loans to help you reduce your interest even more.
Unlike other forms of debt consolidation, balance transfers won't ding your credit score.
Insurance Products. Lake Michigan Credit Union also has an insurance division, Lake Michigan Insurance Agency.
This division offers a variety of insurance products, including auto, boat, life, homeowners, health and disability, Medicare plans, and business insurance.
Insurance companies that provide LMIA policies include Progressive, Nationwide, Citizens, Frankenmuth, Allied, Foremost, and Auto-Owners.
You can add GAP coverage to auto loans and don't pay a penalty if you repay early.
You can get quotes online using the company's mobile app.
If you send a copy of your current insurance policy declarations page, an LMIA agent will review your policy and send you LMIA's quote for the same coverage.
Investment Products. LMCU offers 12, 17, 25 and 60-month interest-bearing certificates of deposit.
If you want more investment help, LMCU's Lake Michigan Investment Services division partners with LPL Financial to offer financial counseling and products such as:
- Roth 401k
- IRA, SEP IRA, 401K, Roth IRA, Simple IRA
- Stocks, bonds, money market, mutual funds, tax-free bond funds
- Stock funds, tax-deferred annuities, unit investment trusts
- REITs (Real Estate Investment Trusts)
- Unit Investment Trust (UIT)
- ETF's (Exchange Traded Funds)
- Managed portfolios
- Structured products
- Alternative products
Mortgages and Home-Equity Loans. You can apply for 15 and 30-year fixed-rate mortgages, a 7-year adjustable-rate mortgage or a 30-year fixed-rate Federal Housing Authority mortgage.
If you're looking to consolidate debt, LMCU recommends taking out a low-interest home-equity loan or using a balance transfer with one of its low-interest credit cards.
You can compare LMCU's savings, credit card, loan and other interest rates against other options by checking LMCU's website, where interest rates are updated daily.
This lets you see which LMCU products offer better rates than other options you've found.
Veterans, doctors, and customers in rural areas also qualify for special mortgage programs, which are explained in detail on the website.
For example, qualified veterans can receive loans with no money down. Service members, vets, and surviving spouses can all qualify for Veterans Administration loans.
LMCU belongs to a national ATM network
Unlike regional credit unions, large banks often have ATMs located across the country.
This lets you withdraw cash or make deposits with no fees while you're traveling. If you use an ATM often, fees can add up to hundreds of dollars each year.
When I first dealt with a credit union, it was about 20 years ago and there never seemed to be an ATM where I needed one.
This meant I was always using the ATMs of big banks, and having to pay their fees.
It ended up costing me $50 a month or more!
The great news is that these days, most credit unions, including LMCU have solved this problem.
While LMCU only has about 70 ATMs, they are part of the Allpoint network of ATMs.
This means you can make transactions for no charge at any Allpoint ATM.
You can use LMCU debit and credit cards free at 55,000 Allpoint ATMs across the country.
You can check Allpoint ATM locations 24/7 using its ATM Locator or phone app.
If you use your LMCU card at an ATM out of its network and get charged a fee, you can get the fee reimbursed if the account you're using qualifies for one of LMCU's ATM fee reimbursement programs.
To reduce my ATM fees, I just withdraw extra money if I know I'm going to be traveling to places where I can't use my card without a fee.
Keeping an extra $30 or $40 in your wallet or purse can save you lots of ATM fees each year.
LMCU has updated its customer tech for online friendliness
Lake Michigan Credit Union recently updated its website to provide more customer services.
You can set up direct-draft payments from your checking or savings account to pay your credit cards, auto loan payment or student loan.
You can apply for a mortgage online.
You can login to check your deposits and payments and transfer funds from one account to another.
You can also download apps and do some banking tasks from your phone or tablet.
Business and consumer customers can deposit checks using an online app that lets you take a picture of a paper check and then deposit it into your account.
However, be aware that the more technology you use to manage your personal finances, the more you put yourself at risk for hacking and fraud.
Make sure you take care to secure your information and only use technology you trust.
The reviews of Lake Michigan Credit Union's customer service are mostly positive.
Complaints are generally related to personal problems reviewers had, not to the specific product offerings of the Credit Union.
LMCU helps its customers at its branch location or via a toll-free phone number, online chat or email option.
Its contact center is open Monday through Friday from 8:00 a.m. to 11:00 p.m., and Saturdays from 8:00 a.m. to 1:00 p.m.
The locations and contact center are closed during a variety of federal and religious holidays.
Credit Union research and data company, Callahan & Associates, ranked LMCU #1 in Return of Members.
This means the credit union gives more back to its members, either through lower interest rates or higher savings rates.
LMCU offers plenty of freebies and other goodies
Lake Michigan Credit Union offers customer benefits through its Member Owner Rewards Enhancement (MORE) program.
The MORE program awards members points based on their activity, which can be used for theme-park discounts, free use of non-LMCU ATMs and paper checks.
New accounts can earn you discounts with Sprint and LifeLock.
LMCU also has a member travel club that offers discounts on cruises, lodging, and other travel-related expenses.
LMCU holds an annual scholarship program, awarding 15 $2,000 Hutt scholarships to winners of an essay contest each year.
Applicants must be high school seniors who are either Michigan or Florida residents, members of LMCU, or children of LMCU members.
Application information and deadlines are available on the website.
LMCU has many business-banking services and programs
Lake Michigan Credit Union has banking and credit programs for businesses.
Businesses products include:
- Checking accounts
- Operating accounts
- Money market accounts
- Company credit cards
- Credit lines
- Letters of credit
- Asset-based loans
- Real estate loans
- SBA loans
- Health savings accounts
- Customer payment transactions
In addition, LMCU has a program for reimbursing or paying employees with a debit account.
Employers who want to avoid payroll checks can pay employees by issuing them LMCU Pay Cards.
The employee opens the VISA Pay Card account and can then receives wages, expense reimbursements, or other payments from the company directly into the Pay Card account.
The employee can use the card just like a VISA, or at an ATM.
The employer pays a $5.00 monthly fee for these debit cards, which are protected by a personal PIN number.
The card has some of the same benefits associated with other VISA cards, such as a cash-back option on purchases and fraud protection.
Lake Michigan Credit Union Routing Number
Routing number: 272480678
Here are the answers to some Frequently Asked Questions about Lake Michigan Credit Union
- Do I need to become a member?
Yes, but membership is open to pretty much everyone. People who don't live in LMCU's service area can donate $5 to ALS and become a member.
- Do credit unions offer the same products as banks?
In most cases, they do. LMCU might have different credit card offers and members perks, but you can get all the basic checking, savings, loan and credit card products a bank offers.
- Can I bank online?
Yes, and LMCU has recently updated its online banking tools and apps offering more access to your account.
- Is LMCU safe?
Yes, Lake Michigan Credit Union insures your deposits up to $250,000 per depositor. LMCU is insured by the National Credit Union Share Insurance Fund.
- Is LMCU for personal or business customers?
Both. LMCU offers a wide variety of products and services for consumers and businesses.
Monitor your credit and improve your score to get better deals
Like any other lender, Lake Michigan Credit Union will check your creditworthiness to determine how much to lend you and at what interest rates.
To get the lowest rates on credit cards, for example, you'll need a score of 760.
Credit unions are typically more likely to work with people who have lower credit scores, but you must demonstrate at least some creditworthiness.
Your credit score is a number potential lenders use to determine if they will give you credit, how much they will give you, and what interest rates they'll charge.
The two main scores used by lenders are the FICO and VantageScore.
Be aware that there are many variations of your score because auto lenders want to know different information about you than credit card companies and mortgage companies.
Credit-monitoring agencies let you track changes in your score.
Your scores can change can every week depending on how many charges you make, the amounts of payments you make, if you make late payments and other activity.
To begin monitoring your credit scores, contact your bank, credit card companies, and mortgage company to see if they offer a free credit score.
Many of these companies offer free scores, updating your score monthly.
They will also tell you why your score isn't higher, such as balances are too high, you've had late payments, or you have too many new cards.
LMCU offers a member discount on LifeLock identity theft service, which includes credit monitoring.
The website places ads on its pages, earning money from those ads. It also promotes credit card offers from its partners.
Free credit score monitoring is important to make sure you get the credit you need at the best rates possible.
We recommend Lake Michigan Credit Union for either a single financial product or as your main financial institution.
We recommend LMCU based on its stability ratings by BankRate.com and DepositAccounts.com.
We also considered LMCU's mostly positive customer reviews and its wide variety of competitive or superior financial products.
You might find a better credit card or life insurance policy or checking account with another financial services provider.
However, working with one company like Lake Michigan Credit Union gives you a stable base for managing your personal finances.
It also gives you access to a wider variety of perks and benefits.
Have you ever checked out a credit union to see how it compares with the current accounts you have?
If not, you might be paying way more in interest than you realize. Over the years, this can cost you tens of thousands of dollars.
Do you use Lake Michigan?
How has the company worked out for you?
Any great tips (or nightmares) to share with the rest of us?
Let us know in the comments below.