Have you ever come to the point in your life where you begin to wonder if there are other options besides big banks? I’ve reached that point folks! Currently I have a checking, saving and credit card with Wells Fargo, whom I’ve been with since I was 18. Honestly, I’ve had no major problems with them besides the high interest rate but I signed up for that so can only blame myself. They are convenient being nationwide but I figured it was time to search around outside my comfort zone.
This brought me to the option of joining a credit union in my community. The popular negativity came to my head at first but luckily that didn’t discourage me. There is a misunderstanding about credit unions being lesser compared to banks. That couldn’t be farther from the truth though. Check out the reasons why a credit union is better than bank.
The Customer Comes First
My favorite incentive for joining a credit union is their boss are their customers. I love companies who put a customer’s best interest at heart before the pockets of shareholders! What does that exactly mean to customers you may be wondering, right? Well when the board of directors talk in their meetings the concern is pleasing the customer. Instead of asking “How can we make our shareholders more money?” the board will ask “How can we make customers happier?”
Two different questions that lead to different outcomes. With customers being the main priority it can lead to better technology, less overhead and better rates. Often for most corporations they are tasked with the goal of making more money for shareholders. The goals can cause a conflict of interest as they can decrease customer happiness and increase profits.
Credit Unions Give Back
Give money into your own community by banking with a credit union. Piggy backing on the prior point, credit unions have their customer’s best interest at heart and that extends to the community. When the time comes on how to disperse funds a significant portion is spent on charity in the community. As an example, we have Alliant Credit Union in Chicago where they offer five $2,000 scholarships to local students each year. Other examples involve providing financial literacy workshops to the public or donating to local charities. Having the money circulate more in the community may not provide any immediate benefits but you should feel all warm inside knowing it will help someone.
Nationally Lower Fees & Better Rates
Compared to national banks, credit unions have lower transaction fees and lower APRs. For those seeking to build up their credit history a credit union can be the ideal place to start.
In addition, they will even offer checks and transactions free of charge. Fees for bounced checks are still present but are lesser when compared to larger national banks. Don’t forget that they also offer lower rates on loans. The National Credit Union Administration reports that as of June 2014, the five-year loans for new cars at banks have an average interest rate of 4.88 percent, compared with 2.74 percent for credit unions.
Relationship Building is Valued
Building a relationship with a large bank will take you only so far. After all they are in the business of making money and understanding client’s personal situations. Credit unions, believe it or not, appreciate clients who have been with them longer and can be more lenient when the time comes to borrow funds. For loans not only are the interest rates on average better than a bank the criteria to apply are more flexible.
Offer the Same Products
A big misconception is that credit unions don’t offer the same products and are inadequate for that reason. To be truthful, most products that are used are provided by credit unions just as they are with banks. The lack of products may be found in a few products missing, but those products are for very special situations. For many Americans, a credit union will be able to meet the needs of the majority.
The Bottom Line
Regarding financial services, credit unions offer the same financial services as a bank would. There is truly not that much of a difference between the two. The obvious disadvantage is the credit union will have limited locations but credit unions do partner with other entities to provide a wider range locations. I believe that every responsible adult should have some type of relationship with a credit union in their community. The rates can be significantly lower, which can save thousands of dollars, and it’s always worth a quick look.
Steps to Picking the Right Choice
Step #1 – Identify Values
Answer the million-dollar question of what matters the most to you.
Convenience? Rates? Supporting a community?
Answering the above will help you figure what value you want in a credit union. Pick your top 5 values and begin searching in your area with a checklist in hand.
Step #2- Narrow the List
After you are done researching the local unions it’s now time to compare and contrast. Which option has the most pros and which has the most cons? What option could you not live without?
Step #3 – Execution
When you are ready to open, an account make sure you call ahead to see what documentation is needed. Credit Unions have a niche type for customers and will require documents to make sure you fit in just right. After you have all the documents pay them a visit to open up the accounts of your choosing and enjoy.
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