You have learned what a credit union is from Go Banking Rates and may be enticed by their unique characteristics. Credit unions certainly have a lot to offer that traditional banks can’t compete with. They also have a few drawbacks that you may not have considered until now.
Credit unions aren’t for everyone. Before you choose a credit union over a bank, first consider both the advantages and disadvantages of banking with one. Your individual financial needs will help you determine if a credit union is the right choice for you.
Advantages of Credit Unions
- You’re More Than a Customer. As a member of a credit union, you are not only a customer, but part-owner of the organization. Aside from receiving better service, you possess voting rights, have a say in the operation of the credit union and receive dividends.
- Interest Rates Beat Banks. Speaking of dividends, you’ll earn a pretty penny on deposits compared with a bank. Credit unions are not-for-profit organizations and share surplus funds in the form of higher interest rates on deposit accounts. According to the Credit Union National Association’s national rate index, the average interest rate on a one year CD at a credit union is 1.17% APY, compared with .94% APY at a bank.
- Community Comes First. Credit unions are owned and run by members of a common community or workplace. For example, membership at a teacher’s credit union is limited to professionals in the educational field. Services provided by a credit union are meant to benefit the local community and depositors living there.
Disadvantages of Credit Unions
- Limited Branch Locations and ATMs. Many credit unions only operate in one location. Even though their smaller, community-based focus is what attracts many credit union customers, it is also one of the inconveniences of banking with them. You will most likely not see a community credit union ATM at the grocery store or local gas station.
- Most Are Insured, but Not All. Like banks and the FDIC, a federal credit union is also insured by the U.S. government. The National Credit Union Administration (NCUA) is the independent government agency that charters and supervises credit unions. However, while most credit unions are insured by the NCUA, many aren’t and your money is vulnerable should the credit union fail.
- Fewer Services. Credit unions don’t offer the wide array of services that full-service banks do. If you need a large commercial mortgage loan, for example, your city credit union may not be able to provide you with one. Available services vary by institution.
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The benefits are there are supposed to be lower fees (although now that most banks offer free checking, that point is slowly becoming less important). The customer service is better.
The disadvantages are that credit unions usually have more strict rules than banks. If you deposit a large check, they are more likely to put a hold on it than a bank. The hours are usually less convenient. They will also have fewer ATM’s.
I have dealt with banks and credit unions, and I’m back with a bank. The difficulty of dealing with a credit union wasn’t worth the extra penny in interest I got every month in my savings compared to the bank.
my credit union dosen’t want to honor there loan agreement. so they blackmail me to pay off the loan to get money from my other account. that started when i took out the loan. Now am 2 month noy paying on the loan. now i want to mke payments on the loan. because of there action. if not. you think they work with me? If not then what happen to the accounts.