There are absolutely tons of reasons you should join a credit union and why credit unions are great.
What is a Credit Union? In comparison to banks, credit unions are financial institutions; however, they are not-for-profit, and their members are part of the organization, meaning it is member-owned. It's a community-based banking system - profits can be returned to the credit union member by higher saving rates and lower fees.
That's what it's all about - helping other members grow and thrive within the union. In fact, savings and checking accounts actually help other members get mortgages to build their very own business or buy their first home. Yes, it is possible!
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In this article, you will discover how do credit unions work and the top 10 reasons you should switch to a credit union today!
1. Credit Unions Have Lower Loan Rates
If you are shopping around for a loan, think twice before going with one of the many big banks. Why? Because big bank loans will have a much higher interest rate - it's as simple as that.
Credit unions are nonprofit, and they aren't looking to make big bucks off your back, which naturally makes them a great option.
Shockingly enough, according to research by the National Credit Union Association, loan rates by big banks (a 48-month car loan, for example) were nearly double what credit unions had to offer!
2. Credit Unions Have The Best Customer Service
Have you ever tried to call a big bank's customer service line? First, you are on hold for what seems like forever (after dealing with a robot for ages), then are redirected to potentially rude and rushing customer service reps.
All in all, not a delightful experience. With credit unions, you're not just a customer - you're technically considered a co-owner of the union. Many policies are much more forgiving for members; thus, the overall 'customer experience' is enough to brag about if you make the switch.
According to Consumer Reports, "Credit unions are among the highest-rated services we've ever evaluated with 96 percent of our members highly satisfied vs. 80 percent for the three biggest national banks."
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3. Credit Unions May Have Lower Fees & Pay Higher Rates on CDs
Keeping excellent customer service in mind, you will also see a reduced amount of fees if you switch to a credit union. Big banks make a lot of money with fees (we're talking billions) from those pesky overdraft fees to ATM fees and even monthly service fees.
According to the Consumer Financial Protection Bureau, $34 billion was collected in bank fees in 2012, of which $20.7 billion resulted from overdraft fees. Yet, research conducted by Moebs Services found that credit union customers pay an average of $12.90 a month in checking account service charges while banks posted an average of $8.95.
While most of the fees were results from overdraft charges, many credit unions offer free check account services and overdraft protection. For example, Randolph-Brooks Federal Credit Union offers free checking accounts with no monthly maintenance fees and no required minimum balances.
Advantages and Disadvantages of Credit Unions by GoBankingRates.com
As financial institutions become more aggressive to gain customers, you will often find that credit unions have much lower fees, but many won't have any fees at all (IE: most credit unions don't have an ATM fee). Lower fees mean more money in your pocket and less given to the corporate banks.
Always check out a credit union's fee policy before joining - some are higher and lower than others.
Do Credit Unions Pay Higher Interest Rates on CDs? In most instances, you find that Credit Unions offer their members a higher APY compared to local financial institutions.
For example, when comparing rates in the San Antonio, Texas market, Randolph-Brooks Federal Credit Union offers a 6-11 month CD ($1,000-$4,999) with an APY of 0.91% compared to USAA's CD for the same time period from 0.25% to 0.56%.
4. Credit Unions May Work With Customers Having Poor & Bad Credit
It is very common for most banks to immediately turn you down if you are applying for a loan with bad/poor credit. However, with credit unions, you have people willing to help you get back on track.
If you have poor or bad credit, you should personally meet with a credit union loan-advisor. Because they value their owners and members, they are eager to work with you (remember, you're a member, not a customer) to figure out your best options.
Their number one goal will be to find a loan option that best suits your needs, and they can even provide tools and programs to help get your credit back in good standing.
5. Credit Unions Offer Same Services as Banks
Though smaller, they are just as mighty as big banks. Credit unions have many of the same services as well-known banks, including mortgage and home equity loans, business loans, consumer loans, counseling, ATMs, electronic banking, checking and savings accounts, overdraft protection, and credit cards.
6. As a Member of a Credit Union, You Can Vote!
Since you're a member or co-owner now of whichever credit union you've decided to go with, you now have union voting rights. You get to make your vote on important decisions, including voting for certain union board members that you favor. As a co-owner, you have a voice in how the union is operated, and you may benefit from the vote you cast.
7. Credit Unions Offer Free Education & Perks That Go Beyond Banking
If you're looking for further benefits that go beyond just banking, credit unions are an excellent choice. For example, credit unions such as Vantage offer financial advisory services and even individual health insurance.
Also, being community-focused, some unions even offer financial education courses, classes, seminars, and other educational services to enrich the community.
For example, several credit unions offer courses on budgeting, retirement planning, and financial literacy.
8. Credit Unions Are Insured Similar to FDIC
With approximately 115 million U.S. customers belonging to credit unions, your money is federally insured by the National Credit Union Share Insurance Fund (NCUSIF) program, which acts very similar to the Federal Deposit Insurance Corporation (FDIC) protecting up to $250,000 per account.
Before selecting a credit union, you should make sure it states that it is NCUA certified.
9. Way Less Complications
Maintaining accounts with credit units are relatively simple, whereas big banks can get complicated. For example, let's say you have a free checking account with a large financial institution.
Unfortunately, when you opened the account, you may not have known that you need to perform 12 signature debit purchases every month, set up two direct deposits, write ten checks, etc. While not a requirement for every bank, it may be for your local area.
These are major inconveniences that you won't have to deal with if you bank with a credit union. Credit unions usually have very easy terms with little to no restrictions, as well as very low fees.
10. Credit Unions Act in Your Best Interest
Consider a credit union to be like a close family member. One that loves and supports you and takes care of you when you are down.
Credit unions take in to count your well-being; they are nonprofit and have customer service reps that are there for your every need. They do have your best interests, whereas big banks make things more of a hassle than anything else. This is what most people rave about - the compassion for union members and the community focus.
What is there not to love? For starters, you will save hundreds of dollars annually on fees that you will be avoiding in comparison to all the money you would lose if you used a big bank service. That's enough of a reason to get me to switch.
There are so many more bonuses like voting, educational services, leniency on people with bad credit, and loan options - all while doing the same thing that banks do - hold your money safely and provide you with checking and savings accounts.
Along with saving money by avoiding fees, you also get to avoid the corporate structure of a bank and be surrounded by community-focused individuals who have your best interests at heart. If you are deciding it's time to switch from a big bank to a credit union, there's never a perfect time to join one than right now! Check out popular credit unions now, and start banking with people that you know you can trust!