When thinking of financial institutions, banks are likely the first to come to mind. However, credit unions are a great alternative, as they offer more personalized and local services that help you feel more secure when you do your financing. Being a member of a credit union comes with many advantages, explaining why many people have made the switch.
If you’re thinking of switching over to a credit union, it’s first important to understand what it is and how it differs from banks. Here’s what you need to know:
What is a Credit Union?
A credit union is a cooperative financial institution, which means that the people who use its services, called members, are also its owners. Credit unions cater to people who share a quality, such as where they live, work, or their occupation background, resulting in unions like a Buffalo or Lancaster credit union. These financial institutions have been around for over a hundred years in the United States, which is a testament to their enduring presence and practicality.
Credit unions are not-for-profit and are established to offer a safe, accessible place for members to manage their money and save it at higher rates of return. It also gives members loans at reasonable rates. Most notably, credit unions provide more personalized, friendlier services.
What are the Advantages of Joining a Credit Union?
While being part of a bank has its own perks, credit unions offer unique advantages you can’t find anywhere else. Here are some of them:
- More Savings
According to the National Credit Union Administration, credit unions offer more favorable interest rates than banks on their certificates of deposit and savings accounts. The national average rate for a 5-year certificate of deposit was 0.76 for credit unions in the first quarter of 2021, while the rate for banks was only 0.63. That means more savings for credit union members without putting in the extra effort.
- Lower Fees
Credit unions usually offer lower fees than banks due to their not-for-profit business structure and unique tax-exempt status. Instead of paying shareholders, credit unions reinvest whatever earnings they make back into the members, reducing the need to charge fees to support operations. You’ll be paying less and saving more as a member of a credit union.
- Better Loan Rates
Another benefit of joining a credit union is that you can take advantage of their lower loan rates. Credit unions have lower interest rates on loans while offering products that banks do, like mortgages and car loans. However, thanks to their business model, the rates are more favorable.
- More Personalized Service
As nonprofit institutions, credit unions depend on their members to continue operating instead of their income. That means they are more dedicated to providing top-notch service to all members through personalized customer service. You’ll never feel like just another source of income when you’re part of a credit union, as the members genuinely care about you and want to make sure they take care of your needs.
- Improvement to Your Local Community
Lastly, credit unions are invested in improving the local community, ensuring the earnings circulate within. Unlike national banks, which funnel money into big-ticket projects, credit unions focus on projects directly impacting their members. The goal is to enhance members’ lives and add value to the community.
Conclusion
Credit unions offer an accessible, stress-free way to handle your savings account and apply for loans. The cooperative business model means they put members and not profit first, which means you will always be their top priority.
Good Neighbors Credit Union is a Buffalo credit union happily serving a diverse membership. We take pride in our ability to offer a high-quality, accessible banking alternative through our range of products, tools, services, and resources that empower our members to manage their finances wisely. Become a member today!