If you’re tired of fees and surcharges, you might be looking for a new bank—but have you considered a credit union instead? When considering the pros and cons of a credit union vs. a bank, many people agree that credit unions come out on top. Here are some of the reasons you might decide to choose a credit union when you’re looking for a new financial institution.
What is a credit union?
Credit unions are nonprofit organizations run by their own members. Like a bank, they’re federally insured and offer many of the same services banks do: checking and savings accounts, ATM withdrawals, loans, credit cards and more. However, they’re a lot smaller than the average bank, which means you’ll have a more personalized experience when you work with a credit union.
Some people believe that they have to work for the government or military to join credit unions, or that these institutions aren’t insured in the same way banks are. Both of these assumptions are incorrect: credit unions are open to everyone, they’re federally insured, and they often offer significantly lower interest rates on loans. Credit unions typically have less strict eligibility requirements, too.
However, credit unions might not be the right choice for you, depending on your needs. They have more limited financial offerings than traditional banks, and fewer physical locations. For most people, however, these drawbacks balance out.
How are credit unions different than banks?
The biggest difference between credit unions and traditional banks is that banks are for-profit enterprises. That’s why you might see charges for having a balance under a certain amount or pay higher fees if you withdraw cash from a competitor’s ATM. Credit unions are nonprofits, which allows them to offer similar services without all those fees.
Banks also tend to have stricter eligibility requirements for loans and higher interest rates. If you’re taking out a car loan or a mortgage, you’re more likely to save money with a credit union. However, some people think the convenience of multiple physical locations, apps, and other features is worth the additional cost.
Which should I choose?
When you’re trying to decide between a credit union vs. a bank, it’s helpful to look at what they offer and compare fees, interest rates and features. While banks will typically have better technological features and more of a national presence, credit unions can offer similar financial services with lower rates and fees. However, credit unions aren’t guaranteed to offer every financial service (such as business credit cards, IRAs and more) that banks do. Depending on what you need from your financial institution, it might make sense to choose one option over the other on a case-by-case basis.
If you’re still not sure whether you should choose a credit union vs. a bank, why not call or visit us online to find out what we can offer? Staff at Direct Financial will be happy to talk to you about our offerings. We look forward to discussing your financial needs with you!