A safe located at a local bank.

You Should Be Using A Credit Union

Are you using a credit union for your banking? You probably should be, because they give you a number of benefits that go far beyond what a bank can do. Take a look at a few of the reasons that you should switch over to a credit union immediately.

What Is A Credit Union?

First, what is a credit union and what exactly separates one from a regular bank?

Both a bank and a credit union will offer consumers loans, checking accounts and savings. The only difference is that a credit union is not for profit and is often much more community driven. The benefit to you is usually lower interest rates on loans, higher interest on savings accounts and generally superior customer service. It is not that simple however, so let’s take a look at all of the consumer benefits to using a credit union.

Benefits To Using A Credit Union

Being not for profit means that a credit union can offer you much more than a bank generally can. Here are some things to expect.

Lower Interest Rates

On the average loan, a credit union can typically offer you a rate that is one or two points lower. This can save you hundreds of dollars in interest over the course of a loan. On a 10,000 dollar loan, for example, you would save nearly 600 dollars in interest in 5 years. Not having a need to turn a profit and impress investors has some real advantages for you.

In addition to the lower rates, credit unions are also more likely to want to get you approved. They are great resources of financial information and often spend quite a bit of time educating their members on credit matters. In short, a credit union wants to work with you, even if you have less than ideal credit. A bank typically will only be willing to deny you or offer you an inflated, high profit, rate.

Higher Interest Rates

A high interest rate sounds bad, unless you are looking at a savings account.

Being able to offer higher rates on savings accounts is a direct result of not being a for profit bank. The money they make, gets distributed right back into the pockets of the members. In this case, it comes back in the form of interest. While this interest rate is not likely to make you much money, every extra dollar counts. 1 percent interest is much better than the.1 percent interest that you would otherwise get from a commercial bank.

Lower Fees

Most for profit banks will nickle and dime you to death with fees. Monthly fees, statement fees, ATM fees, they can really add up. With a credit union, you can save hundreds of dollars a year by not paying these added expenses. Additionally, these fee reductions or eliminations are generally not tied to you maintaining a certain balance or activity level.

Better Customer Service

You are likely to get much better customer service at a credit union for a number of reasons.

For starters, a credit union typically sees less clients and employees are not charged with being as efficient. This means that they often have more time to spend with an individual member without the need to meet a certain production or sales quota.

Also, because the CU is not a for profit business, they are not likely to push products on you that you do not need, just to meet targets set by management. If a credit union employee is offering you a service, they likely generally believe that you can benefit from it.

Local Access

Although there are several national organizations, credit unions generally pop up in a single city or town with multiple locations available to serve you. This will allow you to bank with ease. And, because of the increased customer service that you get from a credit union, you will probably start building a relationship with the staff and management at your preferred branch. Being local, you can be sure that most of these people will be around to serve you for some time, so you should be able to be comfortable.

Ownership

As a member of a credit union, you have voting rights. If you so choose, this gives you the ability to have input on the direction of the board of directors and how the credit union is run. Banks, on the other hand, are out of your control. If you do not like a policy or the direction a bank is going, your only option is to move to another bank.

Same Protection

Many people often get confused and think that credit unions are not protected like regular banks. In fact, credit unions offer the same federal protection of up to 250,000 dollars. If you have deposits in excess of that amount you will need to look into separating them into different accounts or types of accounts.

Posted by
James

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.