Do YOU know what a credit union is? Many people are under the impression that credit unions are synonymous with banks. Unfortunately many people are under the wrong impression. While credit unions and banks are both financial institutions that provide different services for customers, the fact is that credit unions are significantly different than banks. Find out how below!
Owners
Credit unions are owned by the people that use them, also known as members. This typically means members receive better deals at credit unions than they would at banks. At most credit unions, no matter how much (or little) money you have invested, you have a say in the decision-making process.
Non-profit
Don’t confuse the term non-profit with the idea that the institution can’t earn a profit. Non-profit actually means that more of the profits are shared with the owners/customers, which for credit unions, are the same people. The non-profit status also helps credit unions benefit from exemption from federal tax.
Less fees, more savings
If you don’t want strict rules regarding the amount of money you need to have in your checking account at any time, a credit union may be right for you. Fees such as minimum balance requirements are often not associated with credit unions, giving members more freedom. When it comes to saving, credit unions often offer higher interest rates on savings accounts and charge less interest for loans.
Less technology
Remember how I said the whole non-profit thing was beneficial? Well, turns out that isn’t always the case. When it comes to technology, credit unions are often thought of as lacking. As I’ve mentioned, credit unions provide lower interest rates at the same time as collecting less interest on loans. With privileges such as these, there are fewer funds to enhance other aspects, such as online banking and smartphone apps, which means members are provided with fewer options.
Fewer ATMs
As someone that’s a member of a credit union, I’ll admit it’s a pain trying to withdraw money from an ATM. If you can find a credit union within close proximity, you won’t have a problem because of the CO-OP Network that allows you to withdraw funds from other CO-OP ATMs with no charge. However, you can’t always find a credit union within close proximity, as I’ve come to find out.
Members only
One other drawback to credit unions is that not anyone can walk into any credit union and become a member. Most are either focused on location or a particular profession. While this is a deterrent for some people, with a little research, you’ll be able to find a credit union that fits your needs.
So what do you think? Do the positives outweigh the negatives? Does anyone out there belong to a credit union? Let us know in the comments section below!
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