Credit unions have been working hard to separate themselves from the major banks that continue to be a large presence among financial institutions. However, credit unions have made strong headway over the past couple of years in educating the public on how they work and their benefits.
Even so, many credit union myths persist. Below, we bust the five most common misconceptions about these not-for-profit institutions.
5 Common Credit Union Myths Dispelled
#1. Credit Unions Have Too Many Membership Restrictions
Credit unions are created to support a specific membership network, all of whom share a common bond such as an employer or industry. While legal statutes require that credit unions maintain some level of membership commonality, a rising number of community-chartered credit unions are providing membership to individuals who simply live, work, worship or attend school within a specific geographical region.
#2. There Are Fewer Branch Locations Compared to Big Banks
Skeptics believe the lack of credit union branches causes an inconvenience and even detracts from the advantages of a credit union. However, thousands of credit unions work with each other all over the country through the Credit Union Service Center network.
This network of credit union branches enables members of other credit unions within the network to conduct business at participating branches. Credit union benefits like this are provided to uphold the overall credit union principle of “people helping people.”
#3. ATM Access Is Limited
Due to the misconception regarding insufficient branches, many Americans believe that credit unions provide little to no support in the area of ATM access.
In actuality, many credit union-issued ATM cards are linked to a Co-Op ATM network, which eliminates surcharge fees for credit union members. These ATMs are located frequently traveled locations such as 7-Eleven, Costco and Walgreens across the country.
ATM cards with applicable logos from entities like Star, Cirrus and Pulse networks provide even more accessibility to over 800,000 ATMs nationwide.
#4. Credit Union Members Enjoy Fewer Services
Another falsehood regarding credit unions is that there are a lack of services. Many consider credit unions as an ideal location to deposit funds or modestly invest, but some believe that credit union benefits end there.
Again, credit unions evolve to meet the needs of their members. Thousands of credit unions function as full-service financial institutions that provide the entire gamut of financial products and services–like CDs, loans, checking, savings and more–that many Americans expect of their financial institution.
#5. Credit Unions Charge Fees to Join
This myth is one that is partially skewed. It is true that many credit unions require new members to provide a minimum deposit to join, but this is far from a “fee.”
New members are typically requested to provide a minimum deposit, often as low as $5, which purchases a single “share” of the credit union, and is used to open a share (savings) account under the member’s name.
This initial deposit is not a fee imposed upon members; rather, members are now considered a credit union owner. Additionally, should the account be closed, 100 percent of funds are returned.
Is a Credit Union the Right Choice for You?
Bill Cheney, President and CEO of the Credit Union National Association (CUNA), told us:
“‘Bank Transfer Day’ is very intriguing to credit unions–especially since it seems to be raising the profile of credit unions on a national basis. And that’s great: We believe credit unions are the best option for consumer financial services. The bottom line is this: If consumers are upset with big banks, we think they should look at a credit union – and they’ll like what they see. But, each consumer has to make the smart choice of what works best for him or her, their families and their futures. We recognize that credit unions will ultimately be the best option for most consumers. However, our main point is: All consumers should give credit union membership a very close look. To learn more and to find a credit union that you’re eligible to join, go to: www.aSmarterChoice.org.”
Whether or not existing bank customers decide to take part in the Bank Transfer Day movement on November 5, clearing the air on credit union fallacies can help individuals understand the advantages of a credit union and whether they are the right alternative.