You’ve likely walked or driven past a credit union office but perhaps have never paid much attention to what services they provide. After all, why would you go to a ‘second tier’ financial services institution when you can bank with a top tier one?
Unfortunately, credit unions have grappled with this perception problem for years. Yet, these perceptions are driven by ignorance of what credit unions are and what they do. Credit unions like Dane Country Credit Union provide the same core services that big banks do including accepting deposits and issuing loans.
Nevertheless, there are a number of advantages that should inspire you to switch from your bank to a credit union.
Banks have gained notoriety over the centuries for their relentless and untamed pursuit of profit above all else. We see the average bank manager as a steely, ruthless and rigid individual who cares about nothing else except the bank’s interest. It’s all about maximizing shareholder value by delivering ever higher profit each year.
On the other hand, the mission of a credit union means it has a more humane and empathetic approach to financial services. As a nonprofit whose primary purpose is to serve its members, profits are a secondary goal.
2. You are Part-Owner
Credit unions are cooperatives owned by their members. Once you make a deposit, you will automatically be given voting rights. You’ll also receive dividends from any surplus the credit union makes. In effect, you not only benefit from the banking services but also receive a dividend that somewhat blunts the charges and fees you incurred.
Credit unions don’t have the geographical reach of big banks and will partner with other organizations to give their customers access to services when they are outside their home area. Some credit unions will even reimburse you for ATM fees you incur when you use a third party ATM machine. These benefits are virtually unheard of for most big bank customers.
3. Lower Fees
Credit unions exist for their members. They, therefore, have lower fees. For example, many credit unions have a free checking account that isn’t subject to minimum balance requirements. There are often no fees for overdraft protection whenever a transaction exceeds the available balance in your account.
With the big retail banks, you may have to pay a penalty whenever your account drops below the minimum allowed balance. There are also hefty fees if a transaction requires overdraft protection.
4. Better Loan Rates
In keeping with their nonprofit philosophy, credit unions offer better loan rates than the big retail banks. One study found that the average credit union’s interest rate on a 4-year new car loan was nearly half the rate at major retail banks.
Credit unions are largely looking to cover their cost of operations and deliver a modest return to members. Big banks are continuously pushing the envelope on profitability which is why their interest rates are rarely competitive.
5. Easier Access to Loans
Attractive interest rates are already enough reason to make the switch from big bank to credit union. But the cherry on top are the less stringent terms of a loan application. The conditions are more flexible than the rigidity characteristic of major retail banks.
If you are already a member in good standing, a credit union will bend over backward to accommodate your circumstances. Self-employed persons will especially find credit unions a lifesaver, unlike big banks that are fixated with salaried workers.
6. Personalized Customer Service
Banking today is a great example of the rise of the machines. The drive toward automation has seen numerous processes including customer-facing ones replaced by bots and self-service apps. Credit unions are more local and have, therefore, not been as eager to automate the bulk of their customer support.
Whereas automation can lead to efficiency, there’s just something about calling your financial service provider and speaking to an actual human being. Since they don’t have the enormous customer base of banks, credit union customer service agents often know their customers by name.
Credit unions are arguably one of the best kept secrets of the financial services industry. Unable to match the advertising muscle of big banks, their advantages don’t get as much publicity as they deserve. Visit your nearest credit union and find out how you can move your account from your current banker.