Many people conduct their financial business with banks. But credit unions provide a host of benefits that consumers who have always worked with banks may be unaware of.
Credit unions are similar to banks. Perhaps the biggest difference between credit unions and banks is that the former are nonprofit organizations. Credit unions tend to be smaller than banks, and membership may limited to certain people based on preestablished criteria. For example, some credit unions may offer membership only to people who live within a given postal code, people who belong to specific unions or trade groups, or students/employees of certain schools.
According to statistics from the Credit Union National Association, 3.7 million people joined a credit union in 2015, and numbers are now at an all-time high. That's likely because there are many perks to joining a credit union.
Why choose to join a credit union?
The financial resource Bankrate.com says that, since credit unions are not-for-profit entities, they can pass on extra money to their members through higher interest rates on savings accounts, CDs and other products. This also enables them to offer lower interest rates on loan products and credit cards.
Another advantage to credit unions is that they are cooperatives owned and operated by their members. This gives members a say in institutional decisions, and credit unions typically provide exemplary customer service because members are part-owners.
Credit unions typically charge fewer fees than national banks. Money Crashers says that many credit unions waive fees on checks, electronic transactions and withdrawals, and they do not require minimum balances. Overdraft fees, where applicable, tend to be lower than traditional banks.
Can anyone join a credit union?
Credit unions have limited eligibility by law. Customers cannot open an account in any credit union they choose; they must meet certain requirements. These imitations should not deter prospective customers, as many adult consumers can find credit unions they're eligible to join.
Individuals shopping around for a place to put their money may find that credit unions are just what they need.
