Are you a member of a credit union? Have you ever considered using a credit union?
More than 110 million people are members of credit unions. Credit unions manage over $1.1 trillion of members’ deposits and savings.
Deciding between a bank or a credit union can be tricky. There are many similarities between them, but some significant differences.
So what are the benefits of a credit union? Continue reading to learn what a credit union is and if it is the right choice for you.
What Is a Credit Union?
A credit union is a nonprofit banking alternative owned by its members. These days, they provide checking, savings, loans, and other financial options on par with most banks.
Their nonprofit status means they reinvest their profits instead of paying shareholders. A credit union offers its members lower interest rates on loans and higher returns on their deposits. Often with low or no-fee options for their services.
Credit unions started as small, community-based organizations. As such, they can and do often provide more personalized service to their members.
What Are the Pros and Cons of Credit Unions?
On the plus side, credit unions are nonprofits and tax-exempt. They are controlled by a board of directors who are elected by the credit union’s membership base.
Because of their close ties to the community and their members, they can offer more flexible lending guidelines Most credit unions have high customer satisfaction because they can offer more personal service.
In contrast, because they’re smaller they may not be able to offer as many products or services. As a membership organization, they have requirements for joining.
Credit unions may have fewer brick-and-mortar locations and a limited number of ATMs. However, with the growth of online banking and mobile apps, this is less of a concern than it’s been in the past.
What Are the Benefits of a Credit Union?
One of the biggest credit union benefits is that they can often offer better terms to their members. Unlike a bank, a credit union can reinvest their profits back into their products and services.
As a member, what are the benefits of having a credit union over a bank? If you have a strong credit score, you can get a better rate on your loan. However, even if you have a poor credit history or score, you may still be able to get a favorable loan because a credit union can be more flexible with its standards for its members.
How to Choose a Credit Union
One consideration in choosing a credit union is the membership requirement. You need a connection, often through an employer or group affiliation of some sort (religious, school, union, etc). If you don’t have a connection to them, directly or through a family member, you won’t be able to join.
In addition, look for one that offers the specific financial products and/or services that you need. If you think you might want a mortgage or car loan, take a look at their loan offerings. Do you prefer to use cash more than credit or debit cards? Then make sure there is a location or ATMs near you.
Should You Use a Credit Union?
After evaluating what are the benefits of a credit union, you may very well find that they are the right choice for you. A bank may offer more products and more ATM locations. But, the higher savings rates and lower loan rates a credit union offers is often worth more to many people in the long run.
Please explore the rest of our site for more personal financial advice and insight.