If you’ve been toying with the idea of joining a credit union because you think you and your money could be better served, you might be right.
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“We are now facing inflation rates we haven’t seen in decades,” said Cyndie Martini, CEO and president of Member Access Processing. “Now, more than ever, we need our money to work smarter for us — and that isn’t at a bank.
“We all know the legacy reason for going to a bank was the convenience of more branches. But the pandemic taught us that we can do nearly everything banking activity online. Beginning now, the need for bank branches is less than ever. Smart consumers are moving to credit unions.”
Of course, just like banks, not all credit unions are equal. So before you commit to joining, it’s important to do your research on the best credit unions. However, before you do, here are nine reasons you should consider joining a credit union to help you decide if it’s a financial move that’s right for you.
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They Are Owned by Their Members
“Credit unions are not-for-profit financial cooperatives and only answer to their members, meaning there are no outside stakeholders involved,” said Steve Sexton, personal finance expert and CEO of Sexton Advisory Group. “The cooperatives are controlled by their members and always operate in their best interest. As nonprofits, credit unions don’t make risky investments or pressure their members to buy into certain accounts or services.”
Their Customers Aren’t Just Members — They’re Stakeholders
“Banks operate to generate revenue for their shareholders,” said Ahren Tiller, founder and supervising attorney at Bankruptcy Law Center. “On the other hand, credit unions are owned by the members, so in a credit union, you’re not just a member but also a stakeholder. If you have $20 in your account, you have the same voting rights as someone with $20,000 in their account. This means as long as you’re a member, you have a say in deciding the union’s direction.”
They Offer Personalized Services
“They are able to offer more personalized services where members can feel like their concerns are being dealt with in a timely and thorough manner,” said Erin Ellis, an accredited financial counselor at Philadelphia Federal Credit Union. Some of these services can include:
- Financial literacy programs, events and seminars, which can help you take control of your finances and grow your money
- Tools to assist you in calculating mortgages and investments and creating savings plans
- Counseling on significant money matters to guide you in making the right choices when it comes to your finances
They Are Just as Safe as Banks
“Credit unions are safe as they’re backed by the National Credit Union Share Insurance Fund (similar to FDIC), which insures member credit union accounts for up to $250,000,” Sexton said.
They Offer Higher Savings Rates Than Larger Banks
“Credit unions pass on more of their profits to their members,” said Steffa Mantilla, certified financial education instructor and CEO/founder of Money Tamer. “This means that savings accounts and CDs will have higher savings rates than you can find at larger banks.”
They Typically Offer Better Loan Rates Than Banks
“Credit unions typically have lower interest rates on loans,” said Molly Ford-Coates, an accredited financial counselor (AFC®) and the founder and CEO of Ford Financial Management. “Having a lower interest rate means you will be paying less throughout the life of the loan.”
They Don’t Focus on Fees
“When money is less valuable, customers can’t afford to give money away or have it earn less,” Martini said. “Credit unions offer lower fees, and lower or no ATM fees.”
And banking fees can really add up. According to Forbes Advisor’s 2021 checking account fees survey, monthly maintenance fees average $5.14 across all financial institutions, with credit unions charging some of the least, if at all. And the average fee for an out-of-network ATM is $1.77, but many credit unions either don’t charge this fee or reimburse a certain number of transactions each month.
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They Work With People Who Have Credit Challenges
“Joining a credit union is fantastic for people that have low credit rating, as they are more likely to accept someone in this situation and still offer a good interest rate or APR on a loan,” said Jenna Carson, financial partner at Money Lucid. “It’s a fantastic benefit that a bank simply will not offer you.”
They Work With Small Businesses
“If you run a small business, credit unions have more flexible terms,” Mantilla said. “They’ll work with you to give you a loan or advance where a larger corporate bank would not. Credit unions have the flexibility to help smaller businesses that the big banks would pass over.”
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