Many people do not realize that a credit union may have several advantages over banks. It is not uncommon to hear complaints about service fees, interest rates and other things that banks do. Remember that you are not trapped at your bank. Credit unions have people who complain as well, but often the complaints are far fewer. It comes down to the fact that there is a different business model that credit unions follow. This makes them much more customer friendly than a bank.
1. Credit Unions Put Customers First
When you open an account with a credit union, you become a member of the credit union. The credit union works please its members or shareholders, and not stockholders. This changes the focus from creating the biggest profits to focus on creating the best customer service and support possible. The shift means that many of the policies are more customer friendly. Some credit unions will have meetings where you can vote on policies surrounding your account.
2. Lower Fees
One of the places banks make money is in the fees. The fees associated with a credit union tend to be lower than that of a bank. Transfer fees are lower, and usually there are no ATM fees charged by the credit union. The overdraft policies are better, since overdraft fees tend to be a big money maker for banks. The lower fees means that you can save money by banking at a credit union. Credit unions should help you avoid most banking fees.
3. Better Interest Rates
Credit unions offer higher savings rates and lower interest rates. Since they are not focused on making a profit, but instead just want to cover operating costs they pass on the better interest rates to their customers. The interest rates can be a lot lower for a loan, and you may qualify for further discounts if you have automatic payment set up. The interest rates on deposit accounts are higher than most local banks, though they may not be as high as online banks.
4. Willing to Work With You
A credit union may be more willing to work with you if you have bad or poor credit or have difficulty qualifying for a loan. The loan officers will meet with you directly and work to find a loan that will work for you. If you are interested in getting a mortgage, but have a poor credit history, then a credit union may be the best option for you to use. They may also offer programs that will help you get control of your budget or allow you to cover unexpected expenses.
5. Qualifying to Join
Credit unions have rules regarding who can join them. These rules may be living in a specific geographical region, working at a specific employer or going to school. Once you join the credit union you can stay a member for life, even if you stop meeting the initial member requirements. They may have a requirement that you have savings or share account that remains open in order to keep your membership. Once you have that account you can borrow money, open a checking account or take out a credit union.
6. Credit Union Guarantee
Credit unions do not belong to the FDIC. Instead they have the National Credit Union Administration. This acts the same as the FDIC for credit unions. You will have the same funds guarantee for your accounts as you would if you were with a bank. This means that if the credit union failed you would have a guarantee of their funds up to $250,000. You should make sure that your credit union belongs to the association, so you have the guarantees of funds.
7. Disadvantages of a Credit Union
The only major disadvantage of a credit union is that they tend to be smaller, which means you may have difficult time finding a branch or an ATM when you are out and about. Many credit unions will not charge ATM usage fees, but you will have to pay any fees that the ATM charges itself.