Credit unions are similar to banks but are owned and operated by its members. Just like many things in life it has its pros and cons. Some may prefer to open an account with a large branch while others prefer to go with a small, friendlier.
Once you open an account with a credit union you automatically become a member. Their goal is to deliver great customer service and please their members. At these banks the members are the owners. At some unions they even allow members to vote on policies concerning their account. At larger banks their main focus is the profit. This is why there are so many fees for every little transaction you make. Anything they can do to increase the revenue of the bank they will.
Another advantage of using a credit union is the low fees. At larger banks they tend to charge a fee for everything. There are overdraft fees, ATM fees, service fees, and much more. At a credit union the overdraft fees are lower and there are no ATM fees. These lower fees mean you are saving money. There are no minimum balance requirements and most accounts are free. The only disadvantage is that although you save money on ATM fees. This means there are fewer of them so they are hard to find. In the event that you have to use any other ATM you will still be charged that bank’s service fee.
Credit unions offer lower interest rates and higher savings rates. Again, their goal is not to make a profit but to provide the best customer service. The interest rates on loans are lower than that of larger banks so again, you save money. At some credit unions there is a fixed rate that interest on loans and credit cards cannot exceed. unions are also willing to work with their members. Weather you have poor credit or bad credit, they are willing to seek a loan that best fits your needs. A credit union may be the best option for people who are looking to own homes but don’t have the best credit. There are even programs available to help members get control of their budget and improve their credit.
A disadvantage to credit unions may be the qualifications to join one. You may have to live in a certain area, or be enrolled in school, or work for a certain employer. However, once you join the credit union you are a member for life. If you one day no longer meet the requirements you are still a member. The only requirement may be that you keep an account open in order to keep membership.
As mentioned before credit unions are smaller branches so their ATM’s are not as accessible. They don’t make the money to put ATMs up all across America so their ATM’s are usually local. With larger banks you can find an ATM all across the country. This can be a huge disadvantage because of the fees charged by other branches to use their ATM’s. The plus side to this is that some credit unions will reimburse whatever fees may be charged by other branches.
Another disadvantage of using credit unions is that their technology is limited. Being that they are non-profit they don’t have the funds to invest in technology. Some credit unions don’t even allow online access to accounts while other sites are fully functional. Being that we live in a world where technology is advancing and used for most things this may be a problem for some people. People should look into this feature before choosing a credit union if online access is important to them.
Unions basically offer all of the same products as a large bank. This includes credit cards, debit cards, mortgages, business loans and checking accounts. The only problem is that since they are non-profit they don’t have the funds to advertise so that people can be more aware. Since a lot of people are uninformed about them they don’t generate the funds that a larger bank would so some of the amenities are different. I do believe that if more people were informed about all of the advantages of a credit union they would choose it over a larger bank. The advantages are greater than that of a regular bank and the disadvantages are less. At the end of the day the credit union would profit more and so would its members.