Credit unions have advantages over traditional banks
Are you tired of ridiculous bank fees? Better deals are available at credit unions!
If you don’t like high fees and penalties to banks while you earn no interest on accounts, you aren’t alone. More people are closing accounts at traditional banks and going to credit unions instead. What if you did that? Would the treatment be better and worth the hassle?
A credit union vs. A Bank
The main reason consumers tend to have better experiences dealing with credit unions is that their corporate structure is totally different from the banks’.
- Credit unions are owned by the customers, each of whom is a member. Every member has voting privileges, irrespective of their total deposits or how much they have borrowed – which makes credit unions unique. By comparison, banks are owned by shareholders, the interests of whom are a higher priority than customers.
- A credit union is a non-profit entity, whereas banks are in it for shareholders. Thus, the focus for a credit union shifts from profit to customer service. Since credit unions are tax exempt, more funds are available. If there is a profit, it’s distributed to members in the form of a dividend. You’ll also be pleased to learn that the members’ money isn’t used to pay the kind of sky-high salaries and bonuses that bank executives receive.
Lower rates on loans and lower fees
If you go overdrawn or bounce a check on your credit union account, you’ll have to pay a fee and/or a penalty, but it will still cost you far less than your bank would charge. It’s less likely to pay ATM withdrawal fees, electronic banking or checks with credit unions, and your accounts will have slightly higher interest rates. These factors combined are likely to net you a decent chunk of change every month.
Mortgages, auto loans, or other loans from credit unions often have competitive interest rates, and that can save thousands over the lifetime of a loan. For instance, the current average rate on a 48-month car loan from a credit union is 5.15 percent, while one from a bank might have a rate of 6.34 percent. If you have a one year adjustable mortgage from a bank, you would usually pay 4.73 percent – but get one from a credit union instead, and the rate could be as low as 4.32 percent.
Credit Cards are Cheaper
A recent Pew Charitable Trusts survey found that credit unions charge 20 percent less interest on credit cards than banks do. Of credit unions, only 25% have a fee for transferring balances from another credit card, compared to 88 percent of banks. Be cautious however – make sure your credit union issues in house credit cards. The smaller ones often offer credit cards through major banks like Chase, but you would be subject to the fees and conditions of Chase.
It’s easier to get a loan from a credit union
Since credit unions mostly stayed away from sub-prime mortgages, they were largely unaffected by the recent credit crisis that is still making the banks reluctant to issue loans, even to those with good credit. Credit unions have taken up part of the slack, and have been increasing their lending lately. If you have a decent credit history and FICO score, your best option for a loan might be a credit union.
Who is eligible to join a credit union?
Credit unions are thought to only be open for specific groups, like a trade union or church. Finding a credit union that will take you is incredibly easy these days. You do need to have a common bond with other members, but membership rules are often a lot more relaxed now, and many credit unions are open to entire communities or occupations.
Plenty of online resources exist that you can get information about credit unions, including how to find one near you that you can join. You too can benefit from moving your deposits, loans and other financial products to a credit union today!
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Tags: Auto Loan, bank fee, Banks, bounce check, Credit Card, credit union, credit union account, get a loan, Interest Rate, join credit union, Mortgage