Credit Unions

Fed up with high fees, low returns and poor service at your bank? It may be time to shop for a credit union. These nonprofit cooperatives could be the most misunderstood bargain in banking. Although they often offer higher rates for deposits, lower costs for loans and reduced fees for such things as overdrafts and checking accounts, many people are confused about what it takes to bank with one.

People holding California state IOUs -- including taxpayers, vendors and local governments -- will soon have a tougher time redeeming them, as most major banks are standing firm on a vow not to cash the vouchers after today. Many credit unions say they will continue to redeem the IOUs for customers.

The Contos family knows the bitter taste of the credit crunch. Plans were drawn up for the third of their Golden Star Family Restaurants on land the family had owned for years. Then their longtime bankers turned down the Contoses' request for a $1.5-million loan, offering much less than they needed despite their good credit record.

It's not just giant banks on the brink these days: Losses are clobbering nonprofit credit unions that have strayed from their conservative heritage or whose members have been pulled into economic downdrafts. With rising unemployment compounding the effect of tumbling home prices, more than a third of California's 485 federally insured credit unions lost money in the first half of this year, and three were seized by regulators.

The government-run National Credit Union Share Insurance Fund insures most deposits at credit unions, just as the Federal Deposit Insurance Corp. covers most deposits at banks and thrifts: You can entrust up to $100,000 at any single credit union and be fully covered. It's possible to increase that limit with qualified retirement accounts, joint accounts and trust accounts. The financial-system rescue adopted this month raises the basic insurance limit to $250,000 from $100,000.

Federal regulators said Tuesday that they were making more than $40 billion available to support several credit unions that suffered losses from mortgage securities, and would provide an additional $2 billion to help struggling homeowners. National Credit Union Administration Chairman Michael Fryzel said the credit unions should "use these programs constructively as they work through these difficult times."

Wings Financial of Minnesota is attempting to swoop in and nab El Segundo-based Continental Federal Credit Union in what many believe would be the first hostile takeover in credit-union history. "The way they are going about this is unprecedented in our industry," said Tom Glatt, president of Continental Federal. "The offer was unsolicited, unwelcome and unwarranted."

Consumers are paying huge fees on short-term loans that cover them when they overdraw their checking accounts, under programs that banks and credit unions often enroll customers in without their knowledge, a new study says. Fees to cover overdrafts are taking advantage of Americans' rising use of debit cards to make even small purchases, the Center for Responsible Lending said in the study released on Wednesday. Debit cards typically draw directly on consumers' checking accounts.

When the owner of San Diego Leather had the chance to snap up 40,000 square feet of commercial real estate at her dream location for just $1.3 million, she jumped at it. But her bank was less enthusiastic. It didn't like the fact that the deal involved two older buildings, she said. So Nancy Estolano turned to a local credit union. Soon she had a loan and the buildings, situated at a high-visibility location off Interstate 5 in National City.

Dear Karen: How can we get a press release published? Answer: Make sure your press release is newsworthy. "If you want to write a press release about an upcoming event, but the event is not open to the public, don't go there," said Hilary Kaye, president of HKA Inc., a public relations firm in Tustin. "Focus on what the event is about; for example, a milestone at your company or a move to a new facility." Don't expect your release to run verbatim; it's more likely to provide background for a reporter-written story.