As the economy continues to suffer and big name banks continue to take flak for unscrupulous practices, credit unions have begun to grow. Many people fail to realize the advantages a small credit union has to offer because they cannot see past the blaring marketing plans of big name banks. The major difference between credit unions and banks is that big banks are businesses. Commercial banks have one intention: to make more money from their customers (you). Big name banks often have very low interest rates, loan rates are competitive, and they are always trying to sell you things. On the other hand, credit unions exist to help their members. The following are five reasons why credit unions are your best banking option today:
1. Member Owned: This means that every person with an account at a credit union is a partial owner of that credit union. While wealthy shareholders typically own major banks, you don’t have to be a wealthy shareholder to have some say in the business procedures of a credit union. The minute that you open a credit union account, you own a portion of the credit union. You will get to vote on who you want to serve on the Board of Directors and therefore help guide the direction of your credit union. You are able to provide personal input into what financial services you are interested in having through the credit union.
2. Non-Profit: As mentioned before, big name banks are businesses. They run off of the profit they make from their customers. Because credit unions do not exist to make a profit, they often offer better services at lower costs. They are community oriented and tax-exempt. A credit union is not going to try to sell you something or dupe you into a service that you don’t want or need just to make some money. They are more customer-oriented because their customers are also their members.
3. Better Interest Rates and Loans: Credit unions offer higher interest rates on your savings, money market and CD deposits than typical banks do. They tend to also offer lower interest rates on your mortgage, auto loans, and credit cards. This is possible because of the way the non-profit aspect of a credit union works. The credit union makes profit and then returns the profits back to its member in the form of better interest rates.
4. Lower Penalties on Overdrafts: One of the most aggravating aspects of a big bank is their overdraft charges. Most everyone is going to have an overdraft or two at some point in their life. And most banks are going to take advantage of those times when we lose track of our balances or run out of cash. Big banks tend to charge outrageous fees even for the slightest overcharge. Because credit unions are smaller and more member-oriented they are typically more willing to work with individuals who are having financial difficulties. Many credit unions will not even charge for overdrafts and instead send you a notification and try to solve things with you.
5. Better ATM Access: It is a common misconception that credit unions have highly limited access to ATMs. Although credit unions are typically small, many allow you to access ATMs of other credit unions for no additional fees. So, while they will likely not have as many ATMs nationwide as some of the big national banks, they do offer fairly thorough ATM access, often through an ATM network.