Consumer advocates teamed up with credit union representatives Wednesday to urge people to shop around for better rates on loan and deposit products.

Stephen Brobeck, executive director of the Consumer Federation of America, and Bill Hampel, chief economist at the Credit Union National Association, said the gap between the cost of credit and yields on savings offered by banks and credit unions is wider today than at any time in the last 20 years.

According to an analysis of data from Bank Rate Monitor, credit unions have historically charged between 30 and 50 basis points less than banks on similar loans and paid 30 to 50 basis points more on savings accounts.

"But credit unions are now paying 60 to 100 basis points more on various kinds of savings and charging 1.5 percentage points less on loans than banks," Mr. Hampel said.

In response, the American Bankers Association said credit unions have an unfair advantage because they are tax exempt. The average bank, according to the ABA paid $500,000 in income taxes last year while the average credit union paid nothing.

"In most cases, banks will beat credit unions hands down when consumers factor in convenience, the variety of products offered and the expertise of employees," the ABA added.

But Mr. Brobeck said consumers could earn up to $16 billion more in annual interest if they shifted savings to certificates of deposits. Lower- cost credit cards would reduce consumers' borrowing costs, he added.

"Consumers should shift savings to short-term CDs and pay off credit card balances and shift them to credit unions," Mr. Brobeck said.

The Consumer Federation of America/CUNA study found that on average credit cards from credit unions offer interest rates 5% lower than bank cards do.

Mr. Smith writes for Medill News Service.

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