Most people previously associated banks with trustworthiness, longevity, and stability in the financial world—at least, until recently. With the shake-down of the financial markets and the collapse of many financial institutions, many of us are starting to question if banks are the best way to store, transfer and save our money.
- Credit unions are community-based banking institutions that are owned, in part, by the union's depositors and customers.
- Similar in many ways to traditional banks, credit unions also come with some additional advantages that some may find attractive.
- A focus on the community, attractive rates, and added perks might lure you away from your bank and to your local credit union.
Misconception About Credit Unions
Jenn Cloud, a former spokesperson for Missouri-based Vantage Credit Union, originally founded by members of the St. Louis Suburban Teacher's Association in 1957, noted that credit unions are mistakenly an “exclusive club that requires you to be a part of a union or work in a certain field.”
But that misconception is not true, according to Cloud (now a digital marketing manager for RedKey Realty Leaders in St. Louis). So if you're considering a credit union instead of a bank, there are quite a few reasons to make the jump.
1. Friendliness and Accessibility
Big banks can seem cold, formal, and even unreachable—and those are the ones that still have brick-and-mortar offices. It often seems that branch managers don't have the authority to make the decisions to help you, or that the bank itself is so enormous it doesn't really care about having your business.
2. A Co-Op, Not a Corporation
Credit unions often consider themselves "financial cooperatives" rather than financial institutions. The goal is not to make more money from customers, but to "address a common need through a jointly-owned and democratically-controlled enterprise," according to the Seattle Metropolitan Credit Union.
3. Nothing to Lose
The only standard requirement for membership in most credit unions is that you live in the area. Credit unions offer the same services as banks, such as checking, saving loans, and investment options.
4. It's a Democracy
Perhaps the most outstanding feature of credit unions is that they are member-owned and member-run. Credit unions are free to make decisions to benefit their members, rather than seeking to please stockholders, who may have different interests than the members' interests.
5. Better Rates
The ability to make money on your own money is a huge step in the right financial direction, but something that's often out of reach at a corporate bank unless you reach a high dollar balance in your account. Since profits to stockholders aren't a part of the company vision, credit unions are free to pass surplus money on to members in the form of fewer fees, more services, lower interest on loans, and higher dividends on deposits.
6. Beyond-Banking Perks and Free Education
Some credit unions offer other products, such as individual health insurance and financial advisory services. Most credit unions focus on community enrichment and financial education, with many offering free classes or other educational services to the community.
When it comes to banking services, credit unions often offer the same menu of financial services that you'll find at large banking corporations.
The Bottom Line
If you're frustrated with long lines and unresponsive customer service, a credit union might just be the best place to put your money. It's tough to beat a place that's community-focused, friendly, and offers better interest rates. Just be sure to do the comparison shopping with both traditional and online banks and make sure the credit union you are considering offers the best rates for the service you need.