31 May 2017
Why Credit Unions are a Better Choice than Banks
There are several choices of financial institutions to choose from for your needs. Most people only hear about or use for-profit banks, like Wells Fargo, Bank of America, or SunTrust Bank. Another option that has been gaining popularity are credit unions. Credit unions are not-for-profit financial institutions that offer the same services as for-profit banks. As a member of a credit union since 2010, I know of several reasons why more people should join credit unions instead of banks.
Unlike for-profit banks, credit unions are not-for-profit institutions whose purpose is to serve their members rather than maximizing profits. At credit unions, you are a member, not a mere customer. This means that you can have a say in what the union says and does, or even become a board member, because as a member you are also an owner of the credit union. Banks, however, are owned by stockholders, and the board members may not fully represent the interests of their customer base. The banks are interested in stocks, commercial loans, and offer accounts and services that generate larger incomes. This means that customers may not be happy with what the banks do with their money.
Credit unions, meanwhile, serve their members. Members are more likely to get more personalized service not only because the focus is on them, but also because of the smaller size of credit unions. Banks are open to the public, but credit unions are more exclusionary; members must also be a part of a certain business or group. For example, members of the Michael Baker International Federal Credit Union must be associated in some way with Michael Baker International, by being an employee or family member of an employee. Because members aren’t mere customers at credit unions, there is guarantee of better service from people who truly understand you and your community. Also, while credit unions mainly serve specific groups, that does not mean they are exclusionary. More people are eligible for membership than they may think, through their job, or an interest group membership, or any other type of association, which is why it is a good idea to consider looking into the local credit unions.
A common misconception is that credit unions are harder to access outside of their areas because of their local nature. But that is far from the truth. Credit unions are accessible wherever there is Internet through online portals. Credit unions cooperate with other credit unions through the CO-OP ATM Network. This allows customers to go to Credit Union Service Centers that are outside their regions and even use ATMs, to their greater convenience. In fact, credit union ATMs are fee-free. In this way, credit unions offer the same services as for-profit banks, but with certain advantages.
Another example of a service that credit unions do better is their loans and savings accounts. Credit unions offer lower fees for rates and loans than for-profit banks. Like banks, credit unions offer credit cards, and the rates for those are low too. But their rates for savings accounts are higher than for-profit banks, which is advantageous to the customer. There are also fewer strings attached to accounts at credit unions, but that also means fewer bells and whistles since credit unions have less resources because they are smaller.
In rare instances, just like banks, credit unions can collapse or go bankrupt. Or sometimes, they can merge or be acquired by another credit union and not fold up completely. But their customers are still protected by the Federal National Union Administration, which provides similar protections as the Federal Deposit Insurance Corporation.
In conclusion, credit unions operate very similarly to banks, but provide several advantages to its members (1) better customer experience through personalized services, (2) convenient online access to services, (3) CO-OP ATM Network; (4) lower loan and service fees, and (5) higher interest rates on savings and deposits. IN addition, member contributions are protected, similar to banks. While they may not fully supplant the banking industry, credit unions provide a viable alternative for most of the financial service needs of its members. At a credit union, you are a member, not a chore!