Benefits of joining a credit union abound
Customers have more options than ever before when it comes to personal banking. Your neighborhood is no doubt home to many financial institutions, and it’s up to you to find the one that best suits your individual needs.
Credit unions are one financial institution option to consider. Credit unions benefit their members in various ways while offering many of the same services and amenities offered by traditional banks.
Known around the world by various names, credit unions are member-owned, not-for-profit financial cooperatives that offer financial services to their members. Credit unions are typically organized around a common bond, such as members who belong to a certain community, employer, organization, or club.
According to the World Council of Credit Unions, credit unions pool their members’ savings deposits and shares to finance their own loan portfolios rather than rely on outside capital. Any income made is applied to lower interest rates on loans, higher interest rates on savings accounts or new product and service development.
Since credit unions are under no pressure to make money off of their customers, which traditional banks may be, they can expend more energy developing their offerings and providing a greater level of customer service. Also, since the members of a credit union have a say in the organization’s decisions, usually changes and decisions made are designed to benefit everyone involved.
Credit unions aim to offer financial services at the lowest costs possible and may charge fewer fees as a result. In addition, accounts may be free with no minimum balance requirements.
One of the things that most attracts people to credit unions is that interest rates often significantly exceed those offered by banks. Members can earn more money on their savings. Plus, since interest charged for loans on credit accounts are generally lower than most banks’, the savings is two-fold.
Many credit unions will set a limit to how much interest they will charge on credit cards and loans.
While the benefits certainly make credit unions attractive, it is important to point out some potential disadvantages. Because of their nonprofit status, some credit unions may not have adequate funds to invest heavily in technology.
Mobile banking and websites may be lacking. Also, it can be difficult to find ATMs affiliated with your credit union outside of your community that do not charge additional fees.
What’s more, because credit unions are linked to a certain affiliation, membership may be restricted. But there is a way around this, as newer credit unions are opening every day to service a wider assortment of members.
Credit unions are a great option for those looking to spend less on banking services while potentially earning greater interest on their savings.