You’ve probably heard a few misconceptions about credit unions. If you’ve never banked with one, you may not know realize what is true and what isn’t. In this article we will identify 7 misconceptions about credit unions, and clarify the real truth about credit unions.
- Credit Unions are owned by their members. Truth: Not necessarily, but usually when you say “I own my credit union”, you’re right… at least when it comes to ownership in a traditional, not-for-profit credit union. But many credit unions share common ownership with other financial institutions—other banks or thrift institutions in some cases—through membership in an organization called the National Credit Union Association (NCUA).
- Credit unions pay lower interest rates than banks. Truth: On average, credit unions typically offer lower rates interest rates on loans and higher rates on savings accounts, which is better for the consumer.
- Credit union membership is limited to people with a special affiliation. Truth: Credit unions, like banks, generally don’t limit membership to anyone, although some memberships (or membership rates) may be limited to members of a particular union or profession, such as teachers or people who live in a particular area.
- Credit unions have fewer branches than banks. Truth: In the U.S., it’s true that credit unions usually don’t have as many branches as mega banks—but many credit unions also have branches, both locally and remotely.
- Credit unions offer fewer services than banks do. Truth: Credit unions offer the same basic services as banks. They’re just smaller than banks, generally, and some of their services may be more limited than they are in larger institutions.
- Credit unions are only for people who are poor.
- Credit unions are smaller than banks. Truth: Most credit unions have fewer members than most banks, but not all of them—and they all offer the same basic services as banks.
Truth: Credit unions serve people who are just as wealthy or economically diverse as anyone else. They’re for anyone who wants to save money, invest, buy a house or make other big purchases.
In truth, credit unions have much to offer consumers. While they may lag behind in technological developments and not be quite as accessible if you’re traveling nationwide, they also offer wonderful customer-centric banking services at generally lower costs and with many benefits. While some credit unions require a membership fee to join, the benefits received can be worth it depending on your banking needs. If you’re looking for traditional banking services like checking and savings accounts, investment accounts, mortgage and loan options, and financial advising, credit unions have you covered!
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