9 Reasons to go with a Credit Union Over a Big Bank
Have you been denied for loans from big banks? Do the low interest rates on their products leave much to be desired?
Fortunately, there are other options out there. Credit unions often fly under the radar, yet they can be very advantageous. While credit unions can be a little more difficult to join, once you’re a member, you’ll enjoy a host of different benefits.
Let’s look at nine reasons why you should consider choosing a credit union over a big bank.
1. Credit Unions Have a Customer-First Approach
Big banks are for-profit financial institutions, which means that business decisions aren’t typically made in the best interest of the bank’s customers, but rather, in the best interest of its stockholders.
Credit unions, on the other hand, are non-profit institutions. Because credit unions are also customer-owned and customer-managed, customers are the “stockholders”, so to speak.
This means that all decisions are made in the best interest of the customer!
2. Credit Unions Often Have Better Customer Service
Banks, and especially larger banks, have long been criticized for their impersonal service. Of course, much of this has to do with the realities of scaling a business, automating various functions and tasks, and streamlining different customer service processes.
Generally speaking, credit unions are often smaller than banks and tend to be more local. Without the same customer demands as those of a large bank, credit union members are typically able to enjoy more personalized customer service.
3. Credit Unions Give Members Voting Rights
As a credit union member, guess what? You’re actually a part-owner of your credit union. With this position, you’ll get access to all sorts of benefits and perks. One of these perks is voting rights.
Upon making your first deposit, you’ll earn the right to vote on important issues that directly impact you and your money. Whether you’ve got $10 in your account or $100,000, you’ll still have the opportunity to voice your opinion.
4. Credit Unions Often Pay Dividends
Just as stockholders earn dividends for investing in companies, credit union members can earn dividends.
Some credit unions require you to reach a certain dollar amount in your account before earning dividends; but other credit unions will start paying dividends as soon as you make your first deposit!
5. Credit Unions Often Have Lower and Fewer Fees
The reality is that large banks have to make money for their investors. As credit unions serve members and aren’t bound to quite the same government restrictions and expenses that large banks are, they are typically able to charge fewer fees in general.
Not to mention, the fees that they do charge are often significantly lower than those of big banks!
6. Credit Unions Are Often More Understanding of Poor Credit
Tired of getting turned away from banks? If you’re in need of borrowing options but have less-than-perfect credit, apply for a loan with a local credit union.
Oftentimes, credit unions are more understanding of bad credit; and depending on the credit union, it may have a much higher approval rate.
7. Credit Unions Often Have Lower Interest Rates on Loans
Not only do credit unions offer easier access to loans and higher loan approval rates but many credit unions also offer much lower interest rates on these loans.
When financing a car, for example, members are typically able to shave off a percentage or two from their APRs, simply by borrowing from a credit union instead of a bank.
What’s more is that credit unions often provide loan discounts and even lower APRs to proven or long-time members. Credit unions also offer great rates if you are starting a new business.
8. Credit Unions Often Have Lower Interest Rates on Credit Cards
Again, because credit unions are nonprofit and have lower expenses in general, they are able to provide lower interest rates on many of their credit card products.
According to S&P Global Market Intelligence data from Q4 2019, the average credit card interest rate is 2% lower at credit unions than at banks.
9. Credit Unions Often Have Higher Interest Rates on Accounts
According to the most current information from the FDIC, the average national interest rate on savings accounts is just .07%. Not the greatest return on your hard-earned money, right?
Well, credit unions typically offer higher interest rates on savings accounts, money market accounts, and checking accounts, which incentivizes opening up accounts and making contributions.
If you’re tired of making close to nothing for faithfully contributing to your bank’s savings account, maybe it’s time to cut the cord and give your local credit union a try!
