We're going to start by making a list. Ready?
Write down all the financial products you have, from your checking and savings accounts to your credit card and car loan. Now, next to each one, jot down the name of the financial institution you use for each service.
How many of those institutions are banks? What about credit unions? Chances are the scale tips more towards banks, and that’s not surprising. Although credit union membership began a strong growth surge after the financial meltdown, the industry continues to suffer from an identity crisis. In a survey by the Credit Union National Association, 30 percent of the 18 to 24-year-old respondents said that they haven’t considered because banking with a credit union because they don’t know much about them. So we think we should tell you.
For the sake of those of you out there who may be looking for an alternative to the established norm (or are just plain curious), we present:
Five Things You Didn't Know About Credit Unions
1. Credit unions are not-for-profit full service financial institutions.
Checking accounts? We got them. IRAs? Got those too. Mortgages? Yep. In fact, whatever product you can find at a bank, you'll find at a credit union- including online access and mobile banking.
Did you see the game changing word in that bold sentence? Not-for-profit. Unlike banks that focus on generating higher profits for their stockholders (who may or may not even be bank customers), credit unions are cooperatives owned by the very people that utilize their services. And let’s be clear – it’s not that credit unions do not make profits (after all, they do have to pay staff and keep the lights on) – it’s what they do with those profits that make them different.
Which brings us to the second thing about credit unions…
2. Savings rates are higher and loan rates are lower at credit unions.
Because credit unions are not-for-profit, any revenue generated above operational expenses is returned to the members in the form of more attractive rates- higher on savings and lower on loans. Take the "Great Rate Challenge" and compare rates at a few banks in comparison to those at credit unions. You can't argue with numbers.
Speaking of numbers...
3. Fees are lower at credit unions.
Ah, fees. The bane of the existence of every bank customer. There's no doubt about it. Banks have lots of fees and most of them are pretty high. Remember what we told you about credit unions being not-for-profit? Just like passing along better rates to their members, credit unions have fewer and less costly fees.
4. Your funds are insured up to the same amount as a bank.
Banks have the FDIC (Federal Deposit Insurance Corporation) and credit unions have the NCUA (National Credit Union Administration). Both are independent federal agencies and both insure funds up to the same exact amount - $250,000 per customer (FDIC) or member (NCUA). Your quarter of a mil (or any amount under that) is just as safe at a credit union as a bank.
5. At credit unions, it's all about you.For time immemorial, people have been lamenting the lack of quality customer service at banks. Not the case with credit unions. In survey after survey, credit unions topple banks when it comes to providing an exceptional customer experience. It’s no coincidence that the industry’s motto is “people helping people.” They do.
Better rates. Fewer fees. Same deposit insurance coverage. Superior service.
That’s what credit unions are all about. Now you know.