4 Distinct Advantages Credit Unions Have Over Banks
Credit Unions
When most people think of financial institutions, banks are likely to come to mind first. However, banks are not the only option when it comes to saving money or taking out loans for a new home or a new car.
Credit unions are another option, and in many instances, they can offer advantages when compared to banks.
Personalized Customer Service
Credit unions will generally provide better customer service for their members.
Because most credit unions are based in the community, they will want to take good care of those who do business with them.
Many commercial banks have multiple branches, and some are spread throughout the US. Angering one consumer will not really hit their bottom line.
Credit unions are dependent upon local people for their success so they are more likely to provide solid service.
Credit Union Membership
With a credit union, you’re a member, not a number. This means that the credit union answers to you and others like you in the community.
When people use a nationwide commercial bank, the bank is more concerned with providing shareholder value.
Instead, credit union membership provides the opportunity to vote on the direction of the credit union.
Better Savings Returns
Because there is no need to pay dividends to shareholders spread throughout the world, a credit union will usually provide better interest rates for savings accounts.
Many of the larger banks that advertise nationwide offer a paltry interest rate of 0.01%.
Most credit unions will payout several times that level, which means that money in a savings account will not see its value erode from inflation nearly as rapidly as money left in a large commercial bank.
Lower Interest Rates on Loans
When you go to buy a car or a home on credit, the amount you have to pay is highly dependent on the interest rate a lender happens to offer.
Banks tend to charge higher interest rates than credit unions do. It might not seem like much, but a rate that’s as little as 0.25% lower can save you thousands over the life of a loan when you’re borrowing hundreds of thousands on a new home.
It can be worth shopping around, but credit unions will often save you money when compared to a bank.
The next time you have to get a loan, it can be worth checking with your local credit union. The credit union can also benefit you if you’re looking to open a savings account for an emergency fund or another financial goal. When you use a credit union, you’re not just another number, you effectively have a say in the direction your financial institution takes.
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Category: Banking
