When deciding to open a new bank account, you may wonder if the local credit union you’ve noticed in your neighborhood for years is better than a big bank. The answer is simple. There are fewer differences than you think. This is true in terms of convenience, especially if the credit union you’re considering has good online service and provides access to branches and ATMs nationwide. Below are five other reasons to choose a local credit union.
1. Personal connection with the customers
Large, national banks have earned a reputation for cumbersome customer service and out-of-touch policies. For example, if you want information on auto loans, you go through several automated touchpoints before you can talk to a real person who can answer your question. Your local credit union can provide easy-to-use services and real, live human beings who can answer questions quickly, make recommendations, and help you understand the complicated world of finance.
2. Flexible lending practices
Banks expect a predictable, stable rate of return on their investments. This demand requires big banks to implement restraints on lending and ensures those practices never deviate from a predetermined formula. On the other hand, due to personal connections with their members, credit unions are flexible with their lending practices. They tend to be more willing to make exceptions for details that may not be reflected in a conventional lending formula.
3. Same products and services as banks
Many credit unions provide similar financial services as the banks you use daily, such as online bill pay, direct deposit, and the ability to check account balances. Credit unions typically offer checking and savings accounts, auto, home, and personal loans, credit cards, business banking solutions, and wealth management services. Products often come with perks like zero-to-low fees, lower loan rates, higher savings rates, and credit cards with better rates and fees.
4. Financial education for financial wellness
Almost all credit unions have allotted resources to educate their members on how to manage money well, make a budget, make smart financial decisions, adopt financial planning skills, and live with financial stability. Credit unions do this by providing resources like articles, videos, education modules, webinars, and workshops in the community. In addition to serving as your bank, they often help guide financial decisions to support your personal goals.
5. Credit unions serve their members and communities better
Credit unions are not-for-profit cooperatives owned and controlled by their local members. On the other hand, banks are for-profit institutions owned and managed by their shareholders. Credit unions, in principle, exist to serve a community of people. Credit unions feel no pressure from stockholders to grow profits forever. Profits are returned to members in the form of better rates and fees. They reinvest their earnings into the organization to offer members free checking, better rates, dividends, and other significant benefits. They also use funds to partner with local organizations and give back locally.
Conclusion
Today, many credit unions are on board with online banking and other features as the big banks. On top of that, credit unions typically offer lower fees, higher savings rates, and a more hands-and personalized approach to customer service to their members. While banks still have the upper hand regarding advanced technologies and the diversity of financial products they offer, credit unions can provide better interest rate options for both loans and deposits. If a high level of personal service, better interest rates, and lower fees are more important to you than sophisticated technology and an extensive menu of banking products, in that case, a credit union may be your better choice.
Key Takeaways
- Personal connection with the customers
- Flexible lending practices
- Same products and services as banks
- Financial education for financial wellness
- Credit unions serve their members and communities better
