If you still have your money in a big bank, you may not be getting the most out of it. More and more people are moving their money from the big corporate banks into smaller credit unions for a variety of reasons. Here are some of the more popular ones:
The great thing about credit unions is that they’re not-for-profit, meaning that they’re owned by members and customers instead of by stockholders. Because credit unions are member focused, they offer more benefits and options for customers. Banks, especially large banks with multiple chains across a state or country, are focused on making a profit instead of helping the customer. Credit unions care about their members and try to give them the best possible products and services.
One of the benefits of being member focused means that credit unions can provide better customer service. Large corporate banks are often impersonal and sterile. Since credit unions are smaller, employees tend to know their customer base by name and can provide them with services that accurately match their financial needs. Additionally, credit unions offer face to face interaction instead of automated systems. While automated systems might be great if you have a crisis at an odd hour of the morning or night, sometimes they can’t solve a problem the same way an in-person interaction could.
Keeping in line with the benefits of being member focused and having better service, credit unions offer you more flexibility. Banks generally have a strict policy to follow when they offer loans, credit cards, or accounts. They’re less likely to overlook previous financial mistakes, even if you’re currently in good standing. Since credit unions are focused on giving the customer what they need, their guidelines aren’t as stringent as a bank’s. If you’re someone who has a troubled financial past or a less than exemplary record with money, a credit union will be more likely to overlook these issues.
Banks are all about enforcing strange rules, weird fees, and strict account guidelines. Fortunately, credit unions are about keeping everything simple. A bank might state that in order to maintain a checking account, you need to make at least ten purchases with a debit card or write two checks a month, or log into online banking at least once a week. Most credit unions offer accounts without any over the top guidelines. The terms are easy to follow and don’t inconvenience you.
Low or No Product Fees
If you currently use a bank, you might have noticed fees that suddenly pop up when you make a transaction. Or you might suddenly be penalized with a different fee for doing the same transaction you do every week. Banks are sly about inserting new rules or fees into their products, and they usually do it without informing their customer base. You won’t find these actions happening at a credit union. Most credit union products come without a fee, and if there is a fee (for a bounced check or overdraft protection, for instance), the price is usually significantly lower than what a bank charges.
Low or No Minimum Balance
Unlike banks, most credit unions don’t require a minimum balance to open or maintain an account. The ones that do require a minimum balance usually request a small minimum balance of between $5 to $50, which is a lot less than banks, who can sometimes request a minimum balance of $200 or $500.
Low Interest Rates on Loans
One of the benefits of being a small, customer owned and oriented business is that credit unions can offer lower interest rates on loans and credit cards. Many large banks make a significant portion of their money off of accrued interest, so it’s in their favor to hike up the interest rate. As they’re non-profit, credit unions won’t raise the interest just to make a profit.
Higher Interest Rate on Savings Accounts
Just as they can offer lower interest rates on loans, credit unions can also offer higher interest rates on savings, checking, and money market accounts. Interest rates at banks are usually under 1%, but credit unions typically offer at least twice that amount. Banks are in the business of making money, so they’re not interested in giving more of it away to you. As a non-profit organization, credit unions can’t keep any of the money, which means you benefit by receiving a higher interest rate.
Since credit unions are not-for-profit, they’re allowed to offer customers bonus checks or bonus programs. The profit they make during the fiscal year isn’t shared with stockholders, so it goes right to the members! The offered bonus programs vary depending on the credit union, but they can include bonus checks, “money back” programs (where you receive money for spending money), or rewards programs for credit or debit cards.
You Save Money
The biggest reason why credit unions are better than banks is because you save money when you use them! With better interest rates and eliminated or reduced fees, you’re earning and saving more money. Banks are more interested in charging you fees for your products, but the customer oriented credit unions are more focused on keeping your finances happy.
If you haven’t checked out the local credit unions in your area, it is definitely worth taking the time to do so. What’s the worst that can happen? You might find a better place to keep your money.
(Photo courtesy of Svadilfari)