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Maybe you’ve noticed a local credit union as you’ve been driving by but not thought much about it. Perhaps you’ve figured you do not need their services because you bank with a large, well-known commercial bank instead.
However, you might not be aware of how credit unions operate, or how beneficial their services are to their members. If you learn more about credit union vs commercial bank services, you might be tempted to open up an account with the local credit union yourself.
Let’s take a look at 7 of the top reasons why credit unions are the way to go, and then you can decide for yourself!
1. The Motives of a Credit Union vs Commercial Bank
The history of credit unions is one in which the best interests of customers are a top priority. For many commercial banks, their main concern is the bottom line of the institution itself. With a commercial bank, they have the constant drive to turn a profit and will often do whatever it takes to meet their numbers.
When you’re looking at the benefits of going with a credit union vs commercial bank, this is a big one. You can be more certain that your local credit union will treat you like a valued customer instead of just a number.
2. The Structure of a Credit Union
Credit unions are based on a very cooperative structure because they are essentially owned and operated by their members. As a member, as soon as you make that first, initial deposit, you’ll be granted “voting rights” and dividends since cooperatives are owned and operated by their members.
You might also be able to perform transactions at affiliate locations outside the institution. Many credit unions will even reimburse their members for any ATM fees that were incurred outside of their ATM machines. Be sure to ask about this and any other related benefits when applying to join your local credit union.
3. Lower Fees
Credit unions are known for their lower expenses, and because they’re spending less as a credit union, they can pass those savings on to their members. For example, many credit unions will allow you to open a free checking account without any minimum balance constraints.
When you compare credit union vs commercial bank operations, you’ll notice that many big banks will require you to pay a fee if your account funds fall below a certain number. Chances are, you’ll also be assessed a fee for every transaction you process using a big bank’s overdraft protection.
4. Loan Rates
Credit unions often offer much better rates on their loans than commercial banks can offer. This is because a credit union operates as a nonprofit and they aren’t in the market to fatten their own wallets. You can always compare the rates that some of your nearby credit unions are offering and compare them to the rates of bigger banks. Chances are, the credit union can offer you a much better deal.
5. Borrowing Made Easier
Have you been turned down by many of the major banks for a loan? Don’t give up. Try the local credit union instead. The borrowing standards at the credit union are usually more flexible, and they’re often more willing to work with you and your situation, especially if you’re a member of good standing with them already. For those who are self-employed, this is a huge bonus, because it can be very tough to be approved for a loan with major banks when you work for yourself.
6. Top-Notch Customer Service
If quality customer service is important to you, a credit union is the way to go. Though they might not have a 24/7 customer service line available, their motive is to put the customer first. You’ll find that your local credit union will treat you like part of the family and know you by name.
The focus will always be on you. This isn’t always the case with a big, commercial bank branch. They’ll also have an after-hours hotline available that you can call if you need to report a lost or stolen card.
If you’re worried about whether or not your funds are safe in the hands of your credit union, you can take comfort in knowing that, like most major banks, all accounts are federally insured and backed by the United States government. Don’t hesitate to ask your credit union about the insurance protection that they can provide should you open up an account with them.
How Do I Join?
These are just a few of the many benefits associated with being a part of a credit union. Be aware that most credit unions serve those who are either local affiliated or part of a particular organization like a university. The best first step to take is to contact the credit union and ask them if you’re eligible to join.
Discover Other Useful Information
Now that you’ve learned about some of the differences between the services of a credit union vs commercial bank, you can better equip yourself to choose the financial institution that will best serve your needs.
While you’re here, be sure to check out our other useful financial articles and tips to guide you on how to make better investments and manage your personal finances with ease. Be sure to check back often as we are always adding new, relevant information for our readers who want to stay on top of the business and their finances.