For decades, a majority of working-age individuals around the world have depended on banks for financial services. However, banks have taken a hit in recent years due to financial crises, resulting inshakedowns and an increase in fees to bank customers. As a result of these changes, many have lost confidence in banks and are considering keeping their money elsewhere.
If you are one of those people looking for an alternative, you might want to consider switching to credit unions. Credit unions are member-owned, not-for-profit cooperatives that function much like banks,offering savings, credit and other financial services. What makes them different from banks are their overall customer service and how they run the institution.
In considering whether a credit union is the best choice for you, here are some of their key features to keep in mind:
- Not-for-profit and community-oriented– Credit unions are not-for-profit institutions, meaningthey aren’t required to pay federal or state taxes. Because of this,they don’t need to charge members numerous high fees. In fact, credit unions are democratically governed and ownedby its members (account holders).
To join a credit union, there are certain membership criteria you must meet, such asliving in a specific geographic area or belonging to a certainassociation, college, church, workplace and the like. This bond makes credit unions more approachable and friendlier compared to banks. Members can enjoy a sense of community and are treated equitably, not as sources of extra profit.
- Accessibility and services– Others may think that since credit unions primarily serve a specific demographic and area, accessibility to ATMs and facilities is limited. This is not the case, though, as mobile and online services are now available for busy, on-the-go people.
Additionally, if members use third-party ATMs outside of their network, many credit unions can reimburse those ATM withdrawal fees for a limited number of times a month. Through shared ATMs administered by nationwide interbank networks, memberscan also enjoy convenient resources and facilities similar to those offered by large banking corporations.
- Better and equitable rates – Members of credit unions enjoy lower rates on credits like loans and mortgages. Moreover, unlike banks, they charge fewer fees. In fact,according to Bankrate,about 72%of credit union checking accounts have no balance requirements or monthly maintenance fees.Also, any excess profit earned is either given to members as dividend or invested into the organization to improve rates.
- Offers perks beyond banking – Aside from financial products, credit unions also offer additional perks such as cheap or free financial classes and other educational services to members and their families. Credit unions also offer programs geared towards community development and enrichment.
- Properly regulated and insured – Some may be skeptical about trusting credit unions, but rest assured that these financial institutions are regulated and insured by various agencies.State credit unions are overseen by the states’ credit union regulation agencies. On the other hand, the National Credit Union Administration (NCUA) oversees all federal credit unions in the United States. As for insurance, state credit unions can be insured eitherprivately or by the National Credit Union Insurance Fund (NCUSIF), which is administered by NCUA. All federal credit unions, however, are insured by the NCUSIF.
Making the choice to transfer accounts from a bank to a credit union can be difficult, as your finances are on the line. Of course, further research on specific credit unions, their products, and their protection policies will help you get the most out of any financial institution. It also can’t be denied that these not-for-profit cooperatives offer a number of advantages that big banks lack. With great customer service and better rates, credit unions may just be the right financial institution for you.