Important topic! Of vast importance! So put your big-person pants on and let’s do this thing.
Pros and Cons of Credit Unions (vs. Traditional Banks)
First of all, what IS a credit union? According to the World Council of Credit Unions (WOCCU.org, yes it’s a thing), credit unions are, “member-owned, not-for-profit financial cooperatives that provide savings, credit and other financial services to their members. Credit union membership is based on a common bond, [such as belonging] to a specific community, organization, religion or place of employment. Credit unions pool their members’ savings deposits and shares to finance their own loan portfolios rather than rely on outside capital.”
On the flip side, traditional banks are for-profit businesses, owned by shareholders and not the individual members.
What a credit union IS creates one of its benefits – a credit union is member owned. For many Americans who are angry at the Big Banking System, there is personal satisfaction of taking money away from the businesses that helped cause our financial crisis, and placing it in a co-op where they have a say it what happens to their money.
Banks are interested in making money off their customers – thus you are charged fees and high rates for services. Credit unions are customer-focused, and are interested in providing better services for less. In fact, credit unions live or die based on the quality of service they provide their co-op members.
According to Wisebread.com, credit unions non-profit status is another benefit. Non-profits are exempt from federal taxes. That savings, along with the profits made by the credit union, are passed along to the owners/customers. Therefore, credit unions can offer higher interest rates on savings accounts and CDs, and lower rates on loan products – like car loans and mortgages – and credit cards.
Credit unions are also able to be more flexible than a typical bank, say the folks at MoneyCrashers.com. You aren’t just another number in a long line of credit and loan applications. Big banks use standardized qualifiers to determine whether or not they’ll extend you credit. But credit unions can waive those restrictions, or find ways to work around a low credit score or bank balance.
Final Score: Credit unions can offer lower loan interest rates, higher savings interest rates, better service, and more flexibility, plus the sense of “sticking it to The Man.”
Credit unions are great… if you can actually join one. First, you have to find one in your community that offers the services you need, and second, you have to determine if you are eligible for membership.
Once you do join a credit union, you are limited by their fewer locations and services available. Plus, credit unions offer little in the way of convenient ATMS and online services.
To find a credit union in your area, try researching online at places like ASmarterChoice.org. Or, utilize your social media network. This whole segment came about because a friend of mine asked on Facebook for a recommendation of a good credit union in the south west metro. She learned of three different options to check out. So ask your Friends – you’d be surprised at who is using credit unions.