6 Reasons It's Time to Switch to a Credit Union
- Joining a credit union means becoming a member-owner.
- You may pay less fees and get better interest rates on loans.
- You also get to vote for board members, or can run for a seat yourself.
Joining a credit union is one of the easiest ways to save money.
There are about 5,200 credit unions in the U.S., according to research from IBIS World, and that number is growing. And there are plenty of good reasons for that growth. For many people, once they understand how a credit union works, it's tough to imagine banking elsewhere.
If you currently keep your money in a bank or you're just starting out and need a financial home, here are six reasons to consider a credit union.
1. You're an owner
When you deal with a bank, you're a customer. When you join a credit union, you're a member. And as a member, you're an owner of the credit union. No matter how little (or how much) money you have on deposit, you're entitled to one vote when new board members are elected.
And if you want to take a more active role in the credit union's direction, you can even run for a board position. No one member is more important than another, and your voice counts.
2. Credit unions are not-for-profit
Unlike most businesses, credit unions operate as not-for-profit organizations. The goal of a credit union is not to make a profit but to provide members with the services and financial products they need. You'll find that you're not nickeled and dimed to death by a credit union because it's not in the business of getting rich off fees.
Say you take out a loan from your credit union. You'll still pay interest on the loan, but the interest rate will typically be lower than you would pay if you borrowed from another source. The interest members pay on loans goes back into the day-to-day running of the credit union, helping keep it afloat for all members.
3. You're 'someone'
As a member, you're important to a credit union. You're more likely to be recognized when you walk into a local branch, and it's often easier to land a loan or qualify for a credit card. Credit unions don't follow the same loan and underwriting requirements as banks, so there's more flexibility in terms of loans.
Let's say you need an auto loan but haven't been out of school for long. Your lack of credit history does not tell the entire story. A credit union representative can quickly check your bank account to see how you've managed money in the past.
Being a credit union member doesn't guarantee you money when you need it, but it does give you an edge.
4. You probably won't pay for checking
While many banks used to offer free checking, that number has declined over the years, with banks realizing how profitable it can be to charge customers for checking.
According to the National Credit Union Administration, the government-backed insurer of credit unions, 76.5% of credit unions still offer free checking accounts. That monthly savings can be used for other things, like investing for the future, building an emergency savings account, or paying for your kid to play soccer.
5. You'll save even more money
Besides saving on checking accounts at most credit unions, you may also land lower interest rates on loans, pay little or no ATM fees, and earn a higher interest rate on savings accounts and other financial products.
6. You'll help build the community
Most credit unions are locally owned and operated, and play a role in community growth. When you're a credit union member, you are part of helping your community flourish.
If you've been with the same bank for years and could not be any happier, you have a great thing going and there's no reason to change. But if you're looking for something new and different, you'll do yourself a favor by checking out local credit unions.
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