Money concerns, job instability, and other financial struggles signal a time for a change – and switching to a trustworthy local credit union may be the change you need. A credit union is very much like a bank and offers many of the same services. For example, you can get a checking account with a debit card and a savings account, invest in CDs and an IRA, and get loans. Here are seven reasons why credit unions are better than traditional banks.
1. Credit unions offer lower interest rates
Eligible credit union members receive loans with lower rates, deposit requirements, and fees when compared to other financial institutions. Each quarter, the National Credit Union Administration (NCUA) compares the national average rates for over 20 standard loan and deposit products at banks and credit unions. In nearly every category, credit unions pay members more for deposits and charge less for borrowing.
2. Earn more interest on your savings
Banks are for-profit institutions and have shareholders to worry about. On the other hand, credit unions are not-for-profit entities and owned by their members. That’s why many credit unions typically pay you more interest on the cash you deposit and offer higher interest rates on savings accounts (including CDs).
3. Personal connection with the customers
Large national banks have earned a reputation for cumbersome customer service and out-of-touch policies. 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.
4. Credit unions have members
Banks are for-profit institutions owned by investors and are obligated to deliver a profit to their shareholders. Credit unions are owned by their members as not-for-profit organizations, which means people who use their financial services are more involved in credit union operations. Members of credit unions get to vote on policy changes and leadership, which is not an option at traditional banks. In short, credit union members are part owners of the institution, while investors of banks are part owners of banks.
5. Credit unions share profits with members
All financial institutions care about profit. Credit unions are not-for-profit cooperative institutions. They use profits to keep borrowing costs down for members. Since banks are often publicly traded or privately owned entities, they share profits with their investors, not their customers.
6. Credit unions are community-focused
Credit unions, in principle, exist to serve a community of people. Because of the membership requirements, credit union members often have similar interests, live in the same geographic region, work closely together, or are involved in common groups. They also use funds to partner with local organizations and give back locally. Charitable fundraising, scholarship programs, and sponsorships are examples of how credit unions focus on giving back to the community.
7. Credit unions offer free financial education
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.
Today, many credit unions are on board with online banking and other features like 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 a high level of personal service, better interest rates, and lower fees.
- Credit unions offer lower interest rates
- Earn more interest on your savings
- Personal connection with the customers
- Credit unions have members
- Credit unions share profits with members
- Credit unions are community-focused
- Credit unions offer free financial education