Everybody knows that money doesn’t grow on trees, so it’s just right to look for a financial institution that will help you save and maximize your earnings. As banking fees become more and more expensive, people are starting to look at credit unions like Empower FCU as a viable option. But is it the right move?
In this article, we’ll compare banks to credit unions and determine which is the better choice.
Banks and credit unions generally offer the same kind of products and services. You can get the following services from almost any bank or credit union:
- Savings accounts
- Checking accounts
- Business bank accounts
- Certificates of deposit
- Home loans
- Auto loans
- Personal loans
- Credit cards
- Money orders
- Certified checks
- Safe deposit boxes
How Are They Different?
Unlike banks that are usually owned by investors and stockholders, credit unions are owned by its members. Once you’re a part of their cooperative, you instantly have a say in decisions that will affect all members.
Credit unions are also not-for-profit institutions, so they don’t pay the same taxes that your traditional bank typically pays. However, this doesn’t mean that they operate for free. They still need to collect revenue to be able to pay expenses, salaries, and the like.
These distinct differences between credit unions and banks bring about many advantages.
The Advantages of Credit Unions
Each member of a credit union has an equal vote in any decision, which means that their services are mostly focused on serving one another. Because of this, they are more motivated to offer better rates.
Lower rates on credit cards and loans
Credit unions are known for charging lower rates than banks when it comes to money that they lend. The savings that they’re getting from being a not-for-profit organization enables them to do the following:
- Flexibility to charge less than your local commercial bank
- Offer high interest rates on savings and checking accounts
- Charge low rates on credit cards and loans
Credit unions charge lower transaction fees than any national bank, and some don’t even charge you for monthly servicing fees, withdrawals, and electronic transactions. Many institutions also don’t require a minimum balance for checking accounts. You can imagine how much you can save from not having to pay for these transactions that bank customers do on a regular basis.
Better customer service
Because credit unions operate on a much smaller scale than banks, they’re able to provide you with a quicker and more personalized service. It would not be surprising to be recognized by the tellers and other credit union personnel and be called by your name. Many find this a refreshing change from the cold transactional exchanges they get on regular banks.
Higher probability of being approved for a loan or credit
Banks typically process thousands of loan and credit applications every month, so they set requirements based on the following:
- Credit scores
- Source of incomes
- Deposits made
Combing through these requirements enables them to sort through all of them quickly. If you’re unfortunate enough not to meet these requirements, then your application could easily be declined without a second look. On the other hand, credit unions – because of their customer-centric environment and their personal working relationships with their members – are willing to consider applications from their members who are in good standing.
The Advantages of Banks
More product options
Banks typically offer a wide variety of financial products that credit unions don’t provide:
- Different kinds of credit cards that enable you to accumulate points
- Varying types of savings and checking accounts that can be personalized to your need
- Plenty of loan options depending on you need and capability to pay.
Offering a lot of product options helps customers have more freedom to choose the best products that suit their needs.
Banks have many physical branches, which brings so much convenience. They also have ATMs placed in virtually every corner of the city, so you don’t have to go to their main offices to make a transaction. Credit unions, on the other hand, are typically localized and usually operate on shorter business hours.
Better online services
Nowadays, you can do most of your banking transactions entirely online. You don’t have to find a branch to manage your accounts. Unfortunately, credit unions usually don’t have the budget to invest in online services.
Open to anyone
Credit unions can only cater to customers that meet their membership requirements. For example, you need to belong to a specific industry or company or live in the same geographic area as other members to be eligible. Banks do not require any membership to avail of their products and services.
In conclusion, credit unions and banks offer different benefits, but it’s up to customers to determine which financial institution would satisfy their needs and priorities. If you’re someone who only makes basic financial transactions, like make deposits, do debit card purchases, and pay bills, then a credit union will work for you. However, if you’re in need of specialized and accessible services, then banks would be a better choice.