Credit Unions Are More Popular Than Ever. Should You Make the Switch?
- Most credit unions offer the same products and services as traditional banks.
- Credit unions exist solely for the benefit of their members.
As a member-owner, credit unions offer you benefits banks can't touch.
There are approximately 5,300 credit unions in the U.S., and each exists solely for the benefit of its members. In fact, the members own, operate, and make decisions for the credit union. The day you join, you become one of those owners.
While banks are for-profit businesses, credit unions are not-for-profit financial institutions. That fact alone may be the best reason to switch to a credit union if you're not already a member. Here are some of the other reasons making the switch could make sense.
Because credit unions operate as not-for-profit enterprises, you'll pay fewer (and lower) fees on banking products. You'll probably pay a lower interest rate on loans as well.
Higher interest rates on bank products
Again, because credit unions are not-for-profit, you're likely to earn a higher interest rate on things like interest-bearing savings accounts, money market accounts, and certificates of deposit.
As a member-owner, you matter. Your concerns and ideas matter. You have the right to vote on credit union business and run for a board position, which means you're a valuable member. Let's say you need a short-term loan. While a traditional bank may grant the loan, a credit union will likely be more forgiving of possible issues like your credit score. That's because they can look at your account and see how you've managed money in the past.
Like a bank -- but often better
Here are just a few of the benefits offered by many credit unions:
- Focus on the community: Many credit unions participate in community-building programs, food drives, and other events of interest to the area.
- Financial education: You're more likely to find financial education programs offered through a credit union than a traditional bank. Because credit unions exist to serve the needs of their members, financial education is a valued service.
- Consumer loans: Credit unions offer the same types of consumer loans as traditional banks. That means you can turn to your credit union when you need a mortgage loan, home equity loan, auto loan, credit card, or personal loan.
- ATM convenience: Not only are ATMs available at your credit union, but most have partner credit unions that allow you to use their ATMs at no cost.
- Overdraft protection: Just as you can sign up for overdraft protection through a bank, credit unions allow you to link your checking account to one of your other accounts to ensure you're never overdrawn.
- Insured deposits: While most banks offer FDIC insurance, federal credit unions (and some states) cover deposits up to $250,000 through the National Credit Union Share Insurance Fund (NCUSIF).
Each credit union has its own eligibility requirements. They're typically as simple as whether you're part of a particular labor union, work for a specific company, or live in a general geographic area. There is, literally, a credit union for everyone.
You can be as involved (or as hands-off) as a credit union member as you'd like. There is no rule saying you have to get involved with the operation of a credit union, but if you're interested, decision-making positions are available.
If you're interested in learning more about the credit unions near you, this credit union locator makes it easy.
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