Avoid hidden banking fees

It may be appealing to have one financial institution serve all of your needs, but it can bring its own set of problems, particularly if you have an auto loan and a credit card with your credit union.

Unless you pay attention when you’re applying for an auto loan, you might not realize that the car you’re financing can be used as collateral — not only for the car loan but for other debts, such as a credit card.

It's a practice known as "cross-collateralization," and if you stop making credit card payments, the credit union (banks rarely use this practice) can repossess your vehicle.

"It’s a fairly common clause in credit union loan documents," says Mike McLain, assistant general counsel and senior compliance counsel at the Credit Union National Association.

The clause is designed to make loans less risky.

Smart move: A safer alternative would be to have your auto loan and your credit card from two separate financial institutions.