5 Ways Credit Unions Are Better Than Banks

Many people know that there is a difference between a credit union and a bank, but not many people truly understand what the benefits are.  Credit unions are owned by members rather than investors, meaning that there are distinct advantages for their clients.  Membership in a credit union generally has some restriction – only military members, or employees of a certain company, or something similar.  Despite the fact that millions of people have (or could have) access to a credit union, most people never take advantage of this fact!

The differences between banks and credit unions have definitely come into sharp focus in recent years. One primary reason for this is that banks have increased fees and other means of income to remain profitable. Credit unions have not been nearly as aggressive in raising rates in their branches.  While these two opposing models of doing business definitely each have their advantages, credit unions defeat banks at their own game in several ways.  Consider these, particularly if you’re in the market for a new place do to your banking:

Better Interest Rates

Credit unions often have significantly better interest rates.  Keep in mind, we’re not just talking about interest that you pay on a loan, mortgage or a credit card, but also interest earned on your deposit accounts as well.  Savings, checking, CD, and other interest rates are all better.  By banking with a credit union, more money stays in your pocket. Compare the rates you receive or are charged between two or three institutions (even between credit unions). Wise choices always begin with information gathering efforts.

Lower Fees

Since credit unions are not “for profit” entities, they are under less stringent requirements compared to banks when it comes to money-making activities. Because of this, they do not consider banks as direct competition and are able to keep their fees lower.

There is a list of fees that you should be aware of any time that you open a new account: monthly minimum fees for checking and/or savings accounts, ATM fees, overdraft or NSF fees, and similar drains on your money. These are by far the most often levied against customer accounts, but you need to check with the institution that you are considering.  While all financial institutions are subject to federal regulation when it comes to financing a house, any fees that you incur along the way are generally lower than a bank or what you will find offered by a mortgage broker.

Insured Funds

The FDIC (Federal Deposit Insurance Corporation) is in the throes of rescuing failing banks and reports are saying that the money is running out.  Now, this is not to say that the funds aren’t covered – but it’s always best to stay as safe as possible.  The funds that are on deposit with credit unions are guaranteed by a different organization – the NCUA. Yes, both banks and credit unions are insured by the Federal government, but right now, the NCUA is under far less stress than the FDIC due to troubled bank assets.

Better Customer Service

These days, it is a rare joy to walk in anywhere and get decent service.  Generally, at credit unions someone actually greets you from behind the counter and acts as if you are important no matter how much money you have in their vaults. The fact is that most employees of credit unions are members too, which puts you on the same level as them – and they know how to treat their customers.

Less Stringent Loaning Rules

Credit unions, for much the same reason that they have lower rates, have less stringent rules on who they loan money to.  Because they have rules about who they let into their circle of membership, it is easier for them to lend money out.  Try taking your business to a credit union and see what happens. Since a credit union is member-owned, the rules are more relaxed for granting of loans. Yes, they too are subject to certain provisions and even a credit check, but they are also more forgiving and willing to work with you. They actually care about you and want your business!