Without flexibility, a bank springs to mind when you think of savings accounts. But you can also consider a credit union for this purpose. Both institutions have similar offerings, although with distinct sets of features. Yet unique advantages make a credit union more convenient and hassle-free. For example, banks are usually built for profit, while credit unions are non-profit organizations. No wonder the market size of credit unions, measured by revenue, stood at $81.6 billion in 2021 alone.
In fact, this market has made faster progress than the insurance and finance sectors. So, it is a good idea to weigh the value of credit unions before taking out a loan or applying for a credit card. So, let’s look at the differences to make an informed choice of which financial institution is the right fit for you.
Convenience
Banks offer highly favorable services like bill payments, consultancy, funds remittance, and check clearance. Credit unions offer similar services, although with a greater focus on digital solutions. This is because they are more forward looking and eager to meet the needs of today’s digital natives. You can expect member discounts and take advantage of big offers like employee benefits packages. The top credit union also heavily invests in personalization and local staff support. This makes the processes less intimidating than those at traditional banks.
Interest Rates
Credit union personal loans come with lower maximum interest rates than banks, even for people with lower credit scores. Look for a union that will also offer lower rates on credit products and higher interest rates on deposits than commercial banks. This is usually done since unions follow a customer-centric model. Credit unions are not focused on generating profits for shareholders, and their mission is to create value for members. No wonder there are over 6K credit unions operating in the US as of 2021, an increase of 2.7% from the previous year.
Excellent Customer Service
Big banks have stringent rules and follow strict processes without flexibility. Customers simply become “faceless numbers” since the business goal of all banks is to earn profits. But credit unions strive to serve the community for the greater good. They are continuously rolling out apps and technology solutions. This can ensure excellent customer services and financial education. Strong relationships can help you make smarter financial choices.
Fees and Charges
The transactions and overdraft fees of traditional banks are higher. You also have to pay for insufficient funds, ATM transactions and account opening. They charge a fixed monthly fee for maintenance and similar services as well. These can eat into your savings if you aren’t careful. these fees can also spike initial investment costs. Credit unions, on the flip side, offer extremely favorable and affordable services. All you might have to pay for is a meagre membership fee in exchange for a myriad of benefits.
Credit union members often get to vote on decisions and policies. This helps to best serve your needs. So, check out the features and benefits before picking a credit union for yourself.
